Question

Avnet Inc.

Avnet is one of the world’s largest value-added distributors of electronic componenets, enterprise computer and storage products, IT services and embedded subsystems. Avnet creates a vital link in the technology supply chain that connects the world’s leading electronic component and computer product manufacturers and software developers with a global customer base of original equipment manufacturers, electronic manufacturing services providers, original design manufacturers, and valueadded resellers.8

Avnet, Inc. and Subsidiaries Consolidated Statements of Cash Flows

		Years Ended
		June 29, 2013	June 30, 2012	July 2, 2011
		(Thousands)
	Cash flows from operating activities:
	Net income	$450,073	$567,019	$669,069
	Non-cash and other reconciling items:
	Depreciation and amortization	120,676	101,336	81,389
	Deferred income taxes (Note 9)	(10,019)	11,782	15,966
	Stock-based compensation (Note 12)	43,677	35,737	28,931
	Gain on bargain purchase and other (Note 2)	(31,011)	(2,918)	(22,715)
	Other, net (Note 15)	75,327	66,263	56,846
	Changes in (net of effects from businesses
	acquired):
	Receivables	(94,203)	72,267	(421,457)
	Inventories	225,667	133,178	(321,939)
	Accounts payable	(78,834)	(319,094)	165,185
	Accrued expenses and other, net	(5,156)	(136,852)	26,804
	Net cash flows provided by operating
	activities	696,197	528,718	278,079
	Cash flows from financing activities:
	(Repayments of) borrowings under accounts
	receivable securitization program, net (Note 3)	(310,000)	510,000	160,000
	Issuance of notes in a public offering, net of
	issuance costs (Note 7)	349,258	?	?
	Repayment of notes (Note 7)	?	?	(109,600)
	(Repayments of) proceeds from bank debt,
	net (Note 7)	(179,861)	86,823	1,644
(Repayments of) proceeds from other debt, net (Note 7)		(1,080)	(1,007)	7,238
Repurchases of common stock (Note 4)		(207,192)	(318,333)	?
Other, net (Note 12)		4,792	5,590	3,930
Net cash flows (used for) provided by financing activities		(344,083)	283,073	63,212
Cash flows from investing activities: Purchases of property, plant and equipment		(97,379)	(128,652)	(148,707)
Cash proceeds from sales of property, plant, and equipment		3,018	1,046	10,621
Acquisitions of operations and investments, net of cash acquired (Note 2)		(262,306)	(313,218)	(690,997)
Cash proceeds from divestiture activities (Note 2)		3,613	?	19,108
Net cash flows used for investing activities		(353,054)	(440,824)	(809,975)
Effect of exchange rate changes on cash and cash equivalents		3,419	(39,437)	51,916
Cash and cash equivalents: ? increase (decrease)		2,479	331,530	(416,768)
? at beginning of year		1,006,864	675,334	1,092,102
? at end of year		$ 1,009,343	$1,006,864	$ 675,334

Required:

(a) Using the Consolidated Statements of Cash Flows for Avnet, prepare a summary analysis for all three years.

(b) Write an analysis and interpretation of the cash flows for Avnet for all three years. Be sure to analyze the cash flows from operating activities, as well as the overall cash inflows and outflows for the firm.

(c) Evaluate the creditworthiness of Avnet based on only the cash flow statements.

(d) What information from the balance sheet would be useful to a creditor in determining whether to loan Avnet money?