Avnet's revenue increased 11.6%

Excluding the impact of divestitures during fiscal year 2006, first quarter pro forma revenue grew 14.2% over the year-ago quarter. GAAP net income for first quarter fiscal 2007 was $64.1 million, or $0.44 per share on a diluted basis, as compared with net income of $24.9 million, or $0.17 per share on a diluted basis, for the first quarter last year. Excluding the impact of certain charges recorded in both the current and prior year quarters as described below, net income and diluted earnings per share increased 95.9% and 93.1%, respectively, to $82.2 million and $0.56 in the first quarter fiscal 2007. Included in these results is stock compensation expense of $0.03 per diluted share in the current year first quarter as compared with $0.02 per share in the same period last year. The current year first quarter results include a debt extinguishment charge of $27.4 million and an income tax audit provision of $3.4 million partially offset by the recovery of a previously reserved non-trade receivable of $2.8 million (included in other income in the statement of operations). The net impact of these items decreased pre-tax income, net income and diluted earnings per share by $24.5 million, $18.1 million and $0.12, respectively. The prior year first quarter results include a debt extinguishment charge of $11.7 million and restructuring and integration charges of $13.8 million. The impact of these items decreased pre-tax income, net income and diluted earnings per share by $25.5 million, $17.1 million and $0.12, respectively. Operating income for first quarter fiscal 2007 was $145.0 million, up 105.1% as compared with operating income of $70.7 million in the year ago quarter and was up 71.6% excluding restructuring and integration charges amounting to $13.8 million recorded in last year's first quarter. Operating income as a percent of sales was 3.97%, up 139 basis points from last year's first quarter, excluding the restructuring and integration charges recorded in last year's first quarter, with both operating groups contributing to the improvement. Roy Vallee, Chairman and Chief Executive Officer, commented, 'We delivered a solid start to fiscal year 2007 with double digit year-over-year growth on the top line and operating income growing more than 6 times faster than revenue. This performance continues to demonstrate the leverage in our business model, but what is more impressive is the consistency across the company as this is the third quarter in a row where all regions in both operating groups drove year-over-year improvement in operating margin. This consistency is the result of the talent and dedication of our global team.' Electronics Marketing (EM) sales of $2.44 billion in the first quarter fiscal 2007 were up 15.4% on a year over year basis and 17.1% when adjusted for divestitures. EM sales in the Americas, EMEA and Asia increased 8.0%, 15.8% and 27.0%, respectively, year over year. EM operating income of $125.6 million for first quarter fiscal 2007 was up 79.7% over the prior year first quarter operating income of $69.9 million and operating income margin for the current year first quarter was 5.2%, up 185 basis points over the prior year quarter. Mr. Vallee added, 'Electronics Marketing had another strong quarter with year-over-year revenue growth over 15% while operating income improved more than 5 times faster than revenue. Revenues for the EMEA and Asia regions were especially strong. This is the fourth quarter in a row where EM drove meaningful and accelerating year-over-year improvement in operating income margin. With the Memec integration behind us, we are now focused on leveraging our global scale and scope as we progress towards our long term business model.' Technology Solutions (TS) sales of $1.21 billion in the first quarter fiscal 2007 were up 4.8% year over year and up 8.9% when adjusted for the divestiture of Avnet Enterprise Solutions ('AES'). First quarter sales in the Americas (pro forma excluding AES) and EMEA increased 7.9% and 13.8%, respectively, year over year, while sales in Asia were down 2.1%. TS operating income was $39.0 million, a 19.8% increase as compared with first quarter fiscal 2006 operating income of $32.6 million, and operating income margin of 3.22% increased by 41 basis points over the prior year first quarter. Mr. Vallee further added, 'Technology Solutions continues to perform well with pro forma year-over-year revenue growth accelerating to 9% this quarter. Operating income margin and returns on capital remain above our long-term financial targets so we are focused on profitable growth and opportunities to expand our products, services and geographies. Our sales of microprocessors rebounded nicely from a soft June quarter and we continue to see strength in storage solutions and software products. Our Partner Solutions Group, which is dedicated to enterprise computing solutions, posted a strong quarter with accelerated revenue growth across all three regions.' During the quarter, the Company completed a public offering of $300 million aggregate principal amount of 6.625% Notes due 2016 and elected to redeem all of its outstanding 9¾% Notes due February 15, 2008. As a result, the Company recorded a debt extinguishment charge of $27.4 million pre-tax, $16.5 million after tax, or $0.11 per share on a diluted basis, consisting of the premium paid to the holders of the 9¾% Notes, the costs related to the termination of interest rate swaps, and the write-off of certain deferred financing costs. This refinancing activity was essentially neutral from an economic perspective as the debt extinguishment charge was approximately equal to the net interest expense reduction over the remaining life of the 9¾% Notes. The settlement of the repurchase of the 9¾% Notes occurred subsequent to the end of the first quarter on October 12, 2006. As a result, both the new 6.625% Notes and the remaining portion of the 9¾% Notes were outstanding at the end of the first quarter fiscal 2007. Ray Sadowski, Chief Financial Officer, stated: 'The actions that we took during the quarter were made possible by a multi-year effort to increase return on capital and improve our credit statistics. With this quarter's refinancing of high interest debt, our effective interest rate is the lowest it has been in years and our leverage and coverage ratios are at our targeted levels. Going forward, we will focus on maintaining our investment grade credit statistics while pursuing profitable growth.'