AVNET, INC. For a description of the Company's critical accounting policies and an understanding of the significant factors that influenced the Company's performance during the quarter endedApril 3, 2021 , this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the consolidated financial statements, including the related notes, appearing in Item 1 of this Quarterly Report on Form 10-Q, as well as the Company's Quarterly Reports on Form 10-Q for the fiscal quarters endedOctober 3, 2020 , andJanuary 2, 2021 and Annual Report on Form 10-K for the fiscal year endedJune 27, 2020 . The Company operates on a "52/53 week" fiscal year and fiscal 2021 contains 53 weeks compared to 52 weeks in fiscal 2020. As a result, the first nine months of fiscal 2021 endedApril 3, 2021 , contained 40 weeks and the first nine months of fiscal 2020 endedMarch 28, 2020 contained 39 weeks. This extra week in the first nine months of fiscal 2021, which occurred in the first quarter of fiscal 2021, impacts the year-over-year analysis in this MD&A.
There are references to the impact of foreign currency translation in the
discussion of the Company's results of operations. When the
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In addition to disclosing financial results that are determined in accordance
with generally accepted accounting principles in the U.S. ("GAAP"), the Company
also discloses certain non-GAAP financial information, including:
Sales adjusted for certain items that impact the year-over-year analysis, which
includes the impact of certain acquisitions by adjusting Avnet's prior periods
to include the sales of acquired businesses, as if the acquisitions had
occurred at the beginning of the earliest period presented. In addition, fiscal
? 2021 sales are adjusted for the estimated impact of the extra week of sales in
the first quarter of fiscal 2021 due to it being a 14-week quarter, as
discussed above. Sales taking into account these adjustments are referred to as
"organic sales." Additionally, the Company has adjusted sales for the impact of
the termination of the Texas Instruments ("TI") distribution agreement between
fiscal years.
Operating income (loss) excluding (i) restructuring, integration and other
expenses, (see Restructuring, Integration and Other Expenses in this MD&A),
? (ii) amortization of acquired intangible assets and (iii) goodwill and
long-lived asset impairment expense. Operating income excluding such amounts is
referred to as "adjusted operating income."
The reconciliation of operating income (loss) to adjusted operating income is presented in the following table:
Third Quarters Ended Nine Months Ended
April 3, March 28, April 3, March 28,
2021 2020 2021 2020
(Thousands)
Operating income (loss) $ 87,684 $ (115,760) $ 163,407 $ (6,548)
Restructuring, integration and other
expenses 17,574 19,211 55,943 58,073
Goodwill and long-lived asset impairment
expense - 145,836 - 145,836
Amortization of acquired intangible
assets and other 5,283 21,071 35,875 62,603
Adjusted operating income $ 110,541 $ 70,358 $ 255,225 $ 259,964 Management believes that providing this additional information is useful to
readers to better assess and understand operating performance, especially when
comparing results with prior periods or forecasting performance for future
periods, primarily because management typically monitors the business both
including and excluding these adjustments to GAAP results. Management also uses
these non-GAAP measures to establish operational goals and, in many cases, for
measuring performance for compensation purposes. However, any analysis of
results on a non-GAAP basis should be used as a complement to, and in
conjunction with, results presented in accordance with GAAP.
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OVERVIEW
Organization
Avnet, Inc. and its consolidated subsidiaries' (collectively, the "Company" or "Avnet"), is a global technology solutions company with extensive capabilities that can deliver design, product, marketing and supply chain expertise for customers at every stage of the product lifecycle. Avnet transforms ideas into intelligent solutions, reducing the time, cost and complexities of bringing products to market around the world. Founded in 1921, the Company works with over 1,400 technology suppliers to serve 2.1 million customers in more than
140
countries.
Avnet has two primary operating groups - Electronic Components ("EC") and
Farnell ("Farnell"). Both operating groups have operations in each of the three
major economic regions of the world: (i) the Americas , (ii) EMEA, and (iii)
Asia . A summary of each operating group is provided in Note 15, "Segment
information" to the Company's consolidated financial statements included in this
Quarterly Report on Form 10-Q.
Results of Operations
Significant Risks and Uncertainties
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, constrained work force participation, disrupted logistics and distribution systems, and created significant volatility and disruption of financial markets. As the scope and duration of the COVID-19 pandemic is unknown and its economic impact continues to evolve globally, there is significant uncertainty related to the ultimate impact it will have on the Company's business, its employees, results of operations and financial condition, and to what extent the Company's actions to mitigate such impacts will be successful and sufficient. Accordingly, current results and financial condition discussed herein may not be indicative of future operating results and trends. See the risk factors regarding the impacts of the COVID-19 pandemic included in the Company's Annual Report on Form 10-K for the fiscal year endedJune 27, 2020 and Quarterly Reports on Form 10-Q for the fiscal quarters endedOctober 3, 2020 andJanuary 2, 2021 .
The Company did not experience any meaningful financial impact during the third quarter of fiscal 2021 associated with the COVID-19 pandemic.
Executive Summary Sales of$4.92 billion in the third quarter of fiscal 2021 were 14.1% higher than the prior year third quarter sales of$4.31 billion . Excluding the impact of changes in foreign currency, sales increased 10.7% as compared to sales
in the prior year third quarter.
Gross profit margin of 11.6% decreased 48 basis points compared to 12.0% in the third quarter of fiscal 2020. This decrease is primarily due to geographical market mix and, to a lesser extent, product and customer mix. Operating income of$87.7 million was$203.4 million higher, as compared to the third quarter of fiscal 2020. This represents an increase of 175.7%. Operating income margin was 1.8% in the third quarter of fiscal 2021, as compared to a negative 2.7% operating loss margin in the prior year. The increase in operating income margin when compared to the prior year third quarter is the result of the goodwill and long-lived asset impairment expense in the prior year quarter. Adjusted operating income margin was 2.3% in the third quarter of fiscal 2021 as compared to 1.6% in the third quarter of fiscal 2020, an increase of 62 basis points. This increase in adjusted operating income margin is primarily due to the increase in sales and reductions in selling, general and administrative expenses resulting from the Company's cost savings initiatives, partially offset by the decrease in gross profit margin. 22 Table of Contents Sales The following table presents the reconciliation of reported sales to organic sales for the third quarter and first nine months of fiscal 2021 by region and by operating group. Reported sales were the same as organic sales in the third quarter and first nine months of fiscal 2020. Quarter Ended Nine Months Ended Sales As Reported Organic Organic and Sales Sales Organic Sales Organic TI Sales Adj for TI As Reported Estimated Sales TI Sales Adj for TI Q3-Fiscal Q3-Fiscal Q3-Fiscal Q3-Fiscal Extra Q3-Fiscal Q3-Fiscal Q3-Fiscal 2021 2021(1) 2021(1) 2021 Week(2) 2021 2021(1) 2021(1) (Thousands) Avnet$ 4,916,714 $ 1,659 $ 4,915,055 $ 14,307,945 $ 306,000 $ 14,001,945 $ 292,212 $ 13,709,733 Avnet by region Americas$ 1,160,973 $ 416 $ 1,160,557 $ 3,468,118 $ 77,000 $ 3,391,118 $ 82,885 $ 3,308,233 EMEA 1,585,631 483 1,585,148 4,412,652 97,000 4,315,652 124,232 4,191,420 Asia 2,170,110 760 2,169,350 6,427,175 132,000 6,295,175 85,095 6,210,080 Avnet by operating group EC$ 4,520,608 $ 1,659 $ 4,518,949 $ 13,245,143 $ 284,000 $ 12,961,143 $ 292,212 $ 12,668,931 Farnell 396,106 - 396,106 1,062,802 22,000 1,040,802 - 1,040,802 ___________
Sales adjusted for the impact of the termination of the TI distribution
contract, which was completed in
(1) million in the third quarter of fiscal 2020 and
quarter of fiscal 2021. Sales of TI products was
nine months of fiscal 2020 and $292 million in the first nine months of
fiscal 2021.
(2) The impact of the additional week of sales in the first quarter of fiscal
2021 is estimated.
The following table presents reported and organic sales growth rates for the
third quarter and first nine months of fiscal 2021 as compared to fiscal 2020 by
region and by operating group.
Quarter Ended Nine Months Ended
Sales As Organic Organic
Sales As Reported Sales Sales As Organic Sales
Reported and Organic Adj for TI Reported Sales Adj for TI
and Year-Year % Year-Year % Sales As Year-Year % Organic Year-Year % Year-Year %
Organic Change in Change in Reported Change in Sales Change in Change in
Year-Year Constant Constant Year-Year Constant Year-Year Constant Constant
% Change Currency Currency(1) % Change Currency % Change Currency Currency(1)
Avnet 14.1 % 10.7 % 22.0 % 6.2 % 3.9 % 3.9 % 1.6 % 9.5 %
Avnet by region
Americas (3.5) % (3.5) % 4.9 % (3.8) % (3.8) % (6.0) % (6.0) % (0.2) %
EMEA 4.8 (3.4) 6.5 0.1 (6.0) (2.1) (8.2) (1.8)
Asia 36.2 35.0 50.3 17.7 17.0 15.3 14.6 25.4
Avnet by operating group
EC 13.7 % 10.5 % 22.9 % 6.2 % 4.0 % 3.9 % 1.7 % 10.4 %
Farnell 18.2 12.3 12.3 6.1 2.4 3.9 0.2 0.2
___________
(1) Sales growth rates excluding the impact of the termination of the TI
distribution agreement, which was completed in December 2020 .
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Sales of $4.92 billion for the third quarter of fiscal 2021 were up $606.9
million , or 14.1%, from the prior year third quarter sales of $4.31 billion .
Sales in constant currency in the third quarter of fiscal 2021 increased by
10.7% year-over-year. The increase in sales is primarily the result of increased
sales in the Company's EC Asia region and sales growth at Farnell. The
year-over-year sales increases were impacted by lower sales of TI products in
the third quarter of fiscal 2021. Organic sales in constant currency excluding
TI sales in the third quarter of fiscal 2021 were 22.0% higher than sales in the
third quarter of fiscal 2020 reflecting improvements in both operating groups
across all regions.
EC sales of $4.52 billion in the third quarter of fiscal 2021 increased $545.9
million or 13.7% from the prior year third quarter sales of $3.97 billion . On an
organic basis, EC sales excluding TI increased 22.9% year over year in constant
currency, reflecting sales growth in all three regions. The increase in sales in
the Company's EC operating group is primarily due to improvements in overall
market demand and stronger demand in certain industry sectors, particularly the
transportation and industrial sectors.
Farnell sales for the third quarter of fiscal 2021 were $396.1 million , an
increase of $61.0 million or 18.2% from the prior year third quarter sales of
$335.1 million . Sales in constant currency increased 12.3% year-over-year. These
increases were primarily a result of improved market demand in all three
regions.
Sales for the first nine months of fiscal 2021 were $14.31 billion , an increase
of $833.3 million as compared to sales of $13.47 billion for the first nine
months of fiscal 2020. The increase in sales was primarily due to growth in the
Asia region and the global benefit of an extra week of sales in the first
quarter of fiscal 2021, partially offset by the decline in TI sales. Organic
sales in constant currency excluding TI sales increased 9.5% year-over-year in
the first nine months of fiscal 2021.
Gross Profit
Gross profit for the third quarter of fiscal 2021 was $568.4 million , an
increase of $49.4 million , or 9.5%, from the third quarter of fiscal 2020 gross
profit of $518.9 million . Gross profit margin decreased to 11.6% (or 48 basis
points) from the third quarter of fiscal 2020 gross profit margin of 12.0%,
driven by declines in gross profit margin in both operating groups. The declines
in gross profit margin in both operating groups are primarily due to
geographical market mix and, to a lesser extent, from unfavorable changes in
product and customer mix. Sales in the higher gross profit margin western
regions represented approximately 56% of sales in the third quarter of fiscal
2021, as compared to 63% during the third quarter of fiscal 2020.
Gross profit and gross profit margin were $1.60 billion and 11.2%, respectively,
for the first nine months of fiscal 2021, as compared with $1.59 billion and
11.8%, respectively, for the first nine months of fiscal 2020. The decline in
gross profit margin during the first nine months of fiscal 2021 compared to the
first nine months of fiscal 2020 is primarily due to geographical market mix
and, to a lesser extent, from unfavorable changes in product and customer mix.
Sales in the higher gross profit margin western regions represented
approximately 55% of sales in the first nine months of fiscal 2021 as compared
to 59% during the first nine months of fiscal 2020.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A expenses") were $463.1
million in the third quarter of fiscal 2021, a decrease of $6.6 million , or
1.4%, from the third quarter of fiscal 2020. The year-over-year decrease in SG&A
expenses was primarily due to the cost savings from restructuring activities and
lower amortization expense, partially offset by the impact of foreign currency
due to the weakening U.S. Dollar.
Metrics that management monitors with respect to its operating expenses are SG&A
expenses as a percentage of sales and as a percentage of gross profit. In the
third quarter of fiscal 2021, SG&A expenses as a percentage of sales were 9.4%
and as a percentage of gross profit were 81.5%, as compared with 10.9% and
90.5%, respectively, in the third quarter of fiscal 2020. The decrease in SG&A
expenses as a percentage of gross profit primarily results from operating
leverage created from higher sales, cost savings from restructuring activities,
and lower amortization expense, partially offset by foreign currency due to the
weakening U.S. Dollar and from the decrease in gross profit margin.
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SG&A expenses for the first nine months of fiscal 2021 were$1.38 billion , or 9.6% of sales, as compared with$1.39 billion , or 10.3% of sales, in the first nine months of fiscal 2020. The year-over-year decrease in SG&A expenses was primarily due to the cost savings from restructuring activities and lower amortization expense, partially offset by the impact of foreign currency due to the weakeningU.S. Dollar and from the decrease in gross profit margin. SG&A expenses were 86.3% of gross profit in the first nine months of 2021 as compared with 87.6% in the first nine months of fiscal 2020.
Restructuring, Integration, and Other Expenses
As a result of management's focus on improving operating efficiencies and reducing operating costs, the Company has incurred certain restructuring, integration, and other costs. Restructuring costs primarily relate to the restructuring of the Company's information technology, distribution center footprint, and business operations. Integration costs primarily relate to the integration of certain regional and global businesses, as well as incremental costs incurred as part of the consolidation, relocation, sale and closure of distribution centers and office facilities. Other costs consist primarily of any other miscellaneous costs that relate to restructuring, integration and other expenses, including acquisition related costs and specific and incremental costs incurred associated with the impacts of the COVID-19 pandemic. The Company recorded restructuring, integration and other expenses of$17.6 million during the third quarter of fiscal 2021. The Company recorded$5.4 million of restructuring costs in the third quarter of fiscal 2021, which are expected to provide over$7.0 million in annual operating expense savings once such restructuring actions are completed. During the third quarter of fiscal 2021, the Company also incurred integration costs of$12.0 million and other expenses of$0.2 million . The after-tax impact of restructuring, integration and other expenses were$13.5 million and$0.13 per share on a diluted basis. During the first nine months of fiscal 2021, the Company incurred restructuring costs of$39.9 million , integration costs of$26.5 million , which was offset by a gain on legal settlement of$8.2 million , a reversal of$2.1 million for changes in estimates for costs associated with prior year restructuring actions and a net reversal of other expenses of$0.2 million . The after-tax impact of restructuring, integration and other expenses for the first nine months of fiscal 2021 was$44.6 million and$0.44 per share on a diluted basis.
See Note 16 "Restructuring expenses" to the Company's consolidated financial statements included in this Quarterly Report on Form 10-Q.
Operating Income (Loss)
Operating income for the third quarter of fiscal 2021 was$87.7 million , an increase of$203.4 million , or 175.7%, from the third quarter of fiscal 2020 operating loss of$115.8 million , which included goodwill and long-lived asset impairment expense of$145.8 million . Adjusted operating income for the third quarter of fiscal 2021 was$110.5 million , an increase of$40.2 million , or 57.1%, from the third quarter of fiscal 2020. The year-over-year increase in adjusted operating income was primarily driven by the increase in sales and by the reduction in SG&A expenses.
EC operating income margin increased 49 basis points year over year to 2.6% and Farnell operating income margin decreased 95 basis points year over year to 6.0%.
Operating income for the first nine months of fiscal 2021 was$163.4 million , or 1.1% of consolidated sales, as compared with operating loss of$6.5 million , or negative 0.1% of consolidated sales in the first nine months of fiscal 2020. Adjusted operating income for the first nine months of fiscal 2021 was$255.2 million , a decrease of$4.7 million , or 1.8%, from the first nine months of fiscal 2020. The year-over-year decrease in adjusted operating income was primarily driven by the decline in gross profit margin, partially offset by the increase in sales and the reduction in SG&A expenses. 25 Table of Contents
Interest and Other Financing Expenses, Net and Other Income (Expense), Net
Interest and other financing expenses in the third quarter of fiscal 2021 was$22.3 million , a decrease of$7.4 million , or 24.8%, as compared with interest and other financing expenses of$29.7 million in the third quarter of fiscal 2020. Interest and other financing expenses in the first nine months of fiscal 2021 was$66.1 million , a decrease of$31.1 million , or 32.0%, as compared with interest and other financing expenses of$97.3 million in the first nine months of fiscal 2020. The decrease in interest and other financing expenses in the first nine months of fiscal 2021 compared to the first nine months of fiscal 2020 was primarily related to lower outstanding borrowings during fiscal 2021 as compared to fiscal 2020. During the third quarter of fiscal 2021, the Company had$4.8 million of other income as compared with$12.6 million of other expense in the third quarter of fiscal 2020. During the first nine months of fiscal 2021, the Company had$16.1 million of other expense as compared with$9.6 million of other expense in the first nine months of fiscal 2020. The year-over-year differences in other income (expense) was primarily due to$15.2 million of equity investment impairment expense included in other expense in the first nine months of fiscal 2021 and differences in foreign currency exchange rates between the first nine months of fiscal 2021 and fiscal 2020. Income Tax Benefit The Company's effective tax rate on its income before taxes was a benefit of 53.3% in the third quarter of fiscal 2021. During the third quarter of fiscal 2021, the Company's effective tax rate was favorably impacted primarily by (i) the tax benefit arising from the reduction in value of certain businesses for income tax purposes and (ii) decreases to valuation allowances, partially offset by (iii) increases to unrecognized tax benefit reserves. For the first nine months of fiscal 2021, the Company's effective tax rate on its income before taxes was a benefit of 32.7%. The effective tax rate for the first nine months of fiscal 2021 was favorably impacted primarily by (i) the tax benefit arising from the reduction in value of certain businesses for income tax purposes, (ii) decreases to valuation allowances, and (iii) the mix of income in lower tax jurisdictions, partially offset by (iv) increases to unrecognized
tax benefit reserves. Net Income (Loss) As a result of the factors described in the preceding sections of this MD&A, the Company's net income for the third quarter of fiscal 2021 was$107.5 million , or$1.07 per share on a diluted basis, as compared with net loss of$128.7 million , or$1.29 per share on a diluted basis, in the third quarter of fiscal 2020. As a result of the factors described in the preceding sections of this MD&A, the Company's net income for the first nine months of fiscal 2021 was$107.8 million , or$1.08 per share on a diluted basis, as compared with net loss of$83.2 million , or$0.82 per share on a diluted basis, in the first nine months of fiscal 2020. LIQUIDITY AND CAPITAL RESOURCES Cash Flow
Cash Flow from Operating Activities
During the first nine months of fiscal 2021, the Company generated$197.5 million of cash flow from operations compared to$442.6 million of cash generated in the first nine months of fiscal 2020. These operating cash flows were comprised of: (i) cash flow generated from net income, adjusted for the impact of non-cash and other items, which includes depreciation and amortization expenses, deferred income taxes, stock-based compensation expense, amortization of operating lease assets and other non-cash items, and (ii) cash flows used for, or generated from, working capital and other, excluding cash and cash equivalents. Cash used for working capital and other was$112.0 million during the first nine months of fiscal 2021, including an increase in accounts receivable of$405.7 million , offset by a decrease in inventories of$63.0 million , increases in accounts payable of$224.2 million and accrued expenses and other 26 Table of Contents of$6.5 million . Comparatively, cash generated from working capital and other was$180.9 million during the first nine months of fiscal 2020, including decreases in accounts receivable of$150.1 million and inventories of$228.0 million , offset by decreases in accounts payable of$112.9 million and accrued expenses and other of$84.3 million .
Cash Flow from Financing Activities
During the first nine months of fiscal 2021, the Company made a net repayment of$232.3 million under the Credit Facility and paid dividends on common stock
of$62.4 million . During the first nine months of fiscal 2020, the Company made net repayments of$127.4 million under the Securitization Program, paid dividends on common stock of$63.2 million , and repurchased$235.8 million of common stock.
Cash Flow from Investing Activities
During the first nine months of fiscal 2021, the Company used$39.0 million for capital expenditures primarily related to warehouse and facilities, and information technology hardware and software costs, compared to$61.2 million for capital expenditures in the first nine months of fiscal 2020. During the first nine months of fiscal 2021, the Company paid$18.4 million for an asset acquisition. The Company used$51.5 million of cash for acquisitions, which is net of the cash acquired, and paid$12.5 million for other investing activities during the first nine months of fiscal 2020. Contractual Obligations For a detailed description of the Company's long-term debt and lease commitments for the next five years and thereafter, see Long-Term Contractual Obligations appearing in Item 7 of the Company's Annual Report on Form 10-K for the fiscal year endedJune 27, 2020 . There are no material changes to this information outside of normal borrowings and repayments of long-term debt and operating lease payments. The Company does not currently have any material non-cancellable commitments for capital expenditures or inventory purchases outside of the
normal course of business. Financing Transactions See Note 6, "Debt" to the Company's consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information on financing transactions including the Credit Facility, the Securitization Program, and other outstanding debt as ofApril 3, 2021 . The Company was in compliance with all covenants under the Credit Facility and the Securitization Program as ofApril 3, 2021 andJune 27, 2020 . The Company has various lines of credit, financing arrangements, and other forms of bank debt in theU.S. and various foreign locations to fund the short-term working capital, foreign exchange, overdraft, and letter of credit needs of its wholly owned subsidiaries. Outstanding borrowings under such forms of debt at the end of third quarter of fiscal 2021 was$1.4 million . As an alternative form of financing outside ofthe United States , the Company sells certain of its trade accounts receivable on a non-recourse basis to third-party financial institutions pursuant to factoring agreements. The Company accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the consolidated statements of cash flows. Factoring fees for the sales of trade accounts receivable are recorded within "Interest and other financing expenses, net" and were not material. Liquidity
The Company held cash and cash equivalents of$322.7 million as ofApril 3, 2021 , of which$243.1 million was held outsidethe United States . As ofJune 27, 2020 , the Company held cash and cash equivalents of$477.0 million , of which$411.2 million was held outside ofthe United States . 27 Table of Contents As of the end of the third quarter of fiscal 2021, the Company had a combined total borrowing capacity of$1.70 billion under the Credit Facility and the Securitization Program. There were no borrowings outstanding and$1.3 million in letters of credit issued under the Credit Facility and no borrowings outstanding under the Securitization Program, resulting in approximately$1.61 billion of total availability as ofApril 3, 2021 . Availability under the Securitization Program is subject to the Company having sufficient eligible trade accounts receivable inthe United States to support desired borrowings. Borrowings under the Credit Facility require the Company to maintain certain financial and other covenants and the Securitization has cross default provisions associated with the covenants in the Credit Facility. The Credit Facility requires the Company to maintain minimum interest coverage and leverage ratios. All other forms of debt and financing do not include financial or other covenants. The Company was in compliance with all covenants under the Credit Facility as ofApril 3, 2021 .
During the third quarter of fiscal 2021, the Company committed to an early
redemption of all
During the third quarter and first nine months of fiscal 2021, the Company had an average daily balance outstanding of approximately$249.1 million and$138.2 million , respectively, under the Credit Facility and approximately$76.5 million and$198.6 million , respectively, under the Securitization Program. During periods of weakening demand in the electronic components industry, the Company typically generates cash from operating activities. Conversely, the Company is more likely to use operating cash flows for working capital requirements during periods of higher growth. The Company generated$485.1 million in cash flows from operating activities over the trailing four fiscal quarters endedApril 3, 2021 .
Liquidity is subject to many factors, such as normal business operations as well as general economic, financial, competitive, legislative, and regulatory factors that are beyond the Company's control. This includes the potential impact on liquidity and related compliance with debt covenants as a result of the uncertain future impacts of the COVID-19 pandemic. To the extent the cash balances held in foreign locations cannot be remitted back to theU.S. in a tax efficient manner, those cash balances are generally used for ongoing working capital, capital expenditures and other foreign business needs. In addition, local government regulations may restrict the Company's ability to move funds among various locations under certain circumstances. Management does not believe such restrictions would limit the Company's ability to pursue its intended business strategy. The Company continuously monitors and reviews its liquidity position and funding needs. Management believes that the Company's ability to generate operating cash flows in the future and available borrowing capacity, including capacity for the non-recourse sale of trade accounts receivable, will be sufficient to meet its future liquidity needs. The Company may also renew or replace expiring debt arrangements in the future and management believes the Company will have adequate access to the capital markets, if needed. The Company has historically generated operating cash flows and believes it will have the ability to do
so in the future. As a result of the evolving impacts of the COVID-19 pandemic and the related uncertain future business conditions, the Company is unlikely to make near-term strategic investments through material acquisitions. The Company also expects to use cash for restructuring, integration and other expenses. As ofApril 3, 2021 , the Company may repurchase up to an aggregate of$469.0 million of shares of the Company's common stock through a$2.95 billion share repurchase program approved by the Board of Directors. The Company may repurchase stock from time to time at the discretion of management, subject to strategic considerations, market conditions and other factors. The Company may terminate or limit the share repurchase program at any time without prior notice. As a result of the impacts of the COVID-19 pandemic and the corresponding need to manage liquidity and leverage, the Company has temporarily suspended share repurchases. 28 Table of Contents
The Company has historically paid quarterly cash dividends on shares of its
common stock, and future dividends are subject to approval by the Board of
Directors. During the third quarter of fiscal 2021, the Board of Directors
approved a dividend of
Recently Issued Accounting Pronouncements
See Note 1, "Basis of presentation and new accounting pronouncements" to the Company's consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of recently issued accounting pronouncements.
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