For a description of the Company's critical accounting policies and an
understanding of Avnet and the significant factors that influenced the Company's
performance during the past three fiscal years, the following discussion should
be read in conjunction with the description of the business appearing in Item 1
of this Report and the consolidated financial statements, including the related
notes and schedule, and other information appearing in Item 8 of this Report.
The Company operates on a "52/53 week" fiscal year. Fiscal 2022 contains 52
weeks compared to 53 weeks in fiscal 2021 and 52 weeks in fiscal 2020. The extra
week, which occurred in the first quarter of fiscal 2021, impacts the
year-over-year analysis in this MD&A.

The discussion of the Company's results of operations includes references to the
impact of foreign currency translation. When the U.S. Dollar strengthens and the
stronger exchange rates are used to translate the results of operations of
Avnet's subsidiaries denominated in foreign currencies, the result is a decrease
in U.S. Dollars of reported results. Conversely, when the U.S. Dollar weakens,
the weaker exchange rates result in an increase in U.S. Dollars of reported
results. In the discussion that follows, results excluding this impact,
primarily for subsidiaries in EMEA and Asia, are referred to as "constant
currency."

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:

Adjusted sales for certain items that impact the year-over-year analysis, which

includes the impact of certain acquisitions by adjusting Avnet’s prior periods

include sales of acquired businesses, as if the acquisitions had

occurred at the beginning of the first period shown. Additionally, tax

? 2021 sales are adjusted for the estimated impact of the additional week of sales in

fiscal year 2021 as it is a 53-week year as shown above. In addition,

the Company adjusted its revenue for the impact of the IT termination

distribution agreement between fiscal years. Sales taking into account these

the adjustments are called “organic sales”.

? Operating income excluding (i) restructuring, integration and other charges

   (see Restructuring, Integration


                                       23

and other expenses in this MD&A), (ii) impairment of goodwill and long-lived assets

(iii) expenses related to the Russian-Ukrainian conflict (see

conflict-related expenses in this MD&A) and (vi) amortization of

intangible assets are referred to as “adjusted operating income”.

The reconciliation of operating income and adjusted operating income is presented in the following table:

                                                                    Years Ended
                                                         July 2,      July 3,      June 27,
                                                          2022         2021          2020

                                                                    (Thousands)
Operating income (loss)                                 $ 939,011    $ 281,408    $  (4,628)
Restructuring, integration and other expenses               5,272       84,391        81,870
Goodwill and intangible asset impairment expense                -            -       144,092
Russian-Ukraine conflict related expenses                  26,261            -             -

Amortization of acquired intangible assets and other 15,038 41,245 81,555 Adjusted operating income

                               $ 985,582    $ 407,044    $  302,889


Management believes that providing this additional information is useful to
financial statement users 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.

Operating results

Recent world events and uncertainties

In February 2022, Russian forces invaded Ukraine ("Russian-Ukraine conflict"),
and in response, the member countries of NATO initiated a variety of sanctions
and export controls targeting Russia and associated entities. The sanctions
currently in place limit the Company's ability to provide goods to Russian
customers and banking sanctions significantly negate our ability to collect
outstanding receivables; as such, the Company has recorded an allowance for
credit losses against those receivables that are not covered by customer credit
insurance as of July 2, 2022. Historically, the Company's sales and gross profit
generated from sales to Russian customers is less than 1% of consolidated sales
and consolidated gross profit. See further discussion of the impacts of the
Russian-Ukraine conflict on the Company's results of operations in fiscal 2022
below.

Executive Summary
Sales for fiscal 2022 were $24.31 billion, an increase of 24.5% from fiscal 2021
sales of $19.53 billion. Excluding the impact of changes in foreign currency,
sales increased 27.2% as compared to sales in the prior year. This increase in
sales was predominately driven by sales growth in both operating groups across
all regions driven by strong demand and pricing globally for electronic
components.

Gross profit margin of 12.2% increased by 73 basis points, compared to 11.5% in fiscal 2021. This increase was mainly due to strong overall demand for electronic components and improved prices, products, customers and geographical distribution of sales.

                                       24

  Table of Contents

Operating income of $939.0 million was $657.6 million higher than fiscal 2021.
Operating income margin was 3.9% in fiscal 2022, as compared to 1.4% in fiscal
2021. The increase in operating income margin is the result of increases in
sales and in gross profit margin, partially offset by an increase in selling,
general and administrative expenses to support sales growth. Adjusted operating
income margin was 4.1% in fiscal 2022 as compared to 2.1% in fiscal 2021, an
increase of 197 basis points. This increase in adjusted operating income margin
is primarily due to the increases in sales and gross profit margin, partially
offset by increases in selling, general and administrative expenses to support
sales growth.

Sales

Three-year sales analysis: by Operating group and Geography

The table below provides a year-over-year summary of sales for the Company and
its operating groups.

                                                            Years Ended                                      Percent Change
                               July 2,       % of       July 3,       % of       June 27,      % of      2022 to      2021 to
                                 2022        Total        2021        Total        2020        Total       2021         2020

                                                                  (Dollars in millions)
Sales by Operating Group:
EC                            $ 22,503.3    92.6 %     $ 18,030.5    92.3 %     $ 16,340.1    92.7 %       24.8 %       10.3 %
Farnell                          1,807.4     7.4          1,504.2     7.7          1,294.2     7.3         20.2         16.2
                              $ 24,310.7               $ 19,534.7               $ 17,634.3

Sales by Geographic Region:
Americas                      $  5,896.0    24.3 %     $  4,662.5    23.9 %     $  4,755.3    27.0 %       26.5 %      (2.0) %
EMEA                             7,838.1    32.2          6,149.9    31.5          5,753.4    32.6         27.5          6.9
Asia                            10,576.6    43.5          8,722.3    44.6          7,125.6    40.4         21.3         22.4
Total Avnet                   $ 24,310.7               $ 19,534.7               $ 17,634.3


Reported sales were the same as organic sales in fiscal 2022. The table below
provides the reconciliation of reported sales to organic sales for fiscal 2021
by region and operating group.

                                                                                 Organic
                       Sales                        Organic                       Sales
                    as Reported      Estimated       Sales        TI Sales     Adj for TI
                      Fiscal           Extra         Fiscal        Fiscal        Fiscal
                       2021           Week(1)         2021        2021(2)        2021(2)

                                            (Dollars in millions)
Avnet               $   19,534.7     $    306.0    $ 19,228.7     $   292.2     $ 18,936.5
Avnet by region
Americas            $    4,662.5     $     77.0    $  4,585.5     $    82.9     $  4,502.6
EMEA                     6,149.9           97.0       6,052.9         124.2        5,928.7
Asia                     8,722.3          132.0       8,590.3          85.1        8,505.2
Avnet by operating group
EC                  $   18,030.5     $    284.0    $ 17,746.5     $   292.2     $ 17,454.3
Farnell                  1,504.2           22.0       1,482.2             -        1,482.2


(1)The impact of the additional week of sales in the first quarter of fiscal
2021 is estimated.
(2) Sales adjusted for the impact of the termination of the TI distribution
    agreement.


                                       25

The table below shows reported and organic sales growth rates for fiscal 2022 compared to fiscal 2021 by region and operating group.

                                                                                 Organic
                                   Sales As                      Organic          Sales
                                   Reported                       Sales         Adj for TI
                  Sales As       Year-Year %      Organic      Year-Year %     Year-Year %
                  Reported        Change in        Sales        Change in       Change in
                  Year-Year        Constant      Year-Year       Constant        Constant
                  % Change         Currency       % Change       Currency      Currency(1)
Avnet                  24.5 %          27.2 %        26.4 %          29.2 %          31.2 %
Avnet by region
Americas               26.5 %          26.5 %        28.6 %          28.6 %          31.0 %
EMEA                   27.5            34.6          29.5            36.8            39.6
Asia                   21.3            22.4          23.1            24.3            25.5
Avnet by operating group
EC                     24.8 %          27.6 %        26.8 %          29.6 %          31.8 %
Farnell                20.2            22.2          21.9            24.0            24.0

(1) Revenue growth rate excluding the impact of the end of IT

distribution agreement.


Avnet's sales for fiscal 2022 were $24.31 billion, an increase of $4.78 billion,
or 24.5%, from fiscal 2021 sales of $19.53 billion. Organic sales in constant
currency increased 29.2% year over year, reflecting sales growth in both
operating groups across all regions driven by strong demand and pricing globally
for electronic components.

EC sales in fiscal 2022 were $22.50 billion, representing a 24.8% increase over
fiscal 2021 sales. EC organic sales in constant currency increased 29.6% year
over year reflecting sales growth in all three regions. The increase in sales in
the Company's EC operating group is primarily due to overall stronger market
demand and pricing for electronic components, especially in the transportation
and industrial sectors.

Farnell sales in fiscal 2022 were $1.81 billion, an increase of $303.2 million
or 20.2% from fiscal 2021 sales of $1.50 billion. Sales in constant currency
increased 22.2% year over year. These increases were primarily a result of
increased market demand and pricing for the products that Farnell sells.

As a result of the termination of the Company's distribution agreement between
Maxim Integrated Products, Inc. ("Maxim") and the Electronic Components
operating group, the Company may experience lower sales and gross profit in the
future if the impact of the termination is not offset by sales growth, gross
margin improvements or operating cost reductions. Sales from Maxim products
represented less than 3% of total sales in fiscal 2022.

Gross profit and gross profit margin

Gross profit for the 2022 financial year was $2.97 billionan augmentation of $724.8 millionor 32.4%, compared to FY2021 gross margin of $2.24 billion. Gross profit margin increased to 12.2% in fiscal 2022, or 73 basis points from gross profit margin of 11.5% in fiscal 2021, driven by margin expansion gross profit in both operating groups. Sales in higher-margin Western regions accounted for approximately 56% of sales in fiscal 2022, compared to 55% in fiscal 2021.

Selling, general and administrative expenses

Selling, general and administrative expenses ("SG&A expenses") in fiscal 2022
were $1.99 billion, an increase of $120.0 million, or 6.4%, from fiscal 2021.
The year-over-year increase in SG&A expenses was primarily due to

                                       26

Contents

increased costs to support sales growth and, to a lesser extent, increased costs related to inflation, partially offset by lower expenses due to currency translation from the strengthening of the WE 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 fiscal
2022, SG&A expenses as a percentage of sales were 8.2% and as a percentage of
gross profit were 67.3%, as compared with 9.6% and 83.7%, respectively, in
fiscal 2021. The decrease in SG&A expenses as a percentage of gross profit is
primarily due to the operating leverage created from higher sales, increases in
gross profit margin, and lower amortization expense, partially offset by
increases in SG&A expenses primarily to support sales volumes.

Expenditure related to the Russian-Ukrainian conflict

The Company incurred $26.3 million of costs associated with the Russian-Ukraine
conflict in the third quarter of fiscal 2022, primarily comprised of $17.2
million of expense for credit loss reserves for trade accounts receivable from
Russian customers that are no longer considered collectible. The remaining
expense is primarily related to product write-downs for Russia based customers
and other Russian business operation wind-down costs.

Restructuring, integration and other expenses

During fiscal 2022, the Company recorded restructuring, integration and other
expenses of $5.3 million, substantially all of which was related to integration
costs.

During fiscal 2021, the Company recorded restructuring, integration and other
expenses of $84.4 million consisted of restructuring cost of $59.4 million,
integration costs of $35.8 million, offset by a gain on legal settlement of $8.2
million, and a reversal of $2.6 million for changes in estimates for costs
associated with prior year restructuring actions.

See Note 17, "Restructuring expenses" to the Company's consolidated financial
statements included in Item 8 of this Annual Report on Form 10-K for additional
information related to restructuring expenses.

Operating result

Operating income for fiscal 2022 was $939.0 million, an increase of $657.6
million, from fiscal 2021 operating income of $281.4 million. Operating income
margin was 3.9% in fiscal 2022 compared to 1.4% in fiscal 2021. Adjusted
operating income for fiscal 2022 was $985.6 million, an increase of $578.5
million or 142.1%, from fiscal 2021. Adjusted operating income margin was 4.1%
in fiscal 2022 compared to 2.1% in fiscal 2021. The year-over-year increase in
adjusted operating income and adjusted operating income margin was primarily
driven by the increase in sales and in gross profit margin and lower
amortization expense.

Interest and other financing charges, net and other charges, net

Interest and other financing expenses for fiscal 2022 was $100.4 million, an
increase of $10.9 million, or 12.2%, compared with interest and other financing
expenses of $89.5 million in fiscal 2021. The increase in interest and other
financing expenses in fiscal 2022 compared to fiscal 2021 was primarily a result
of higher outstanding borrowings during fiscal 2022 as compared to fiscal 2021.

In fiscal 2022, the Company had $5.3 million of other expense as compared with
$19.0 million of other expense in fiscal 2021. The year-over-year differences in
other expense was primarily due to an equity investment impairment expense
included in the other expense in the first quarter of fiscal 2021, and
differences in foreign currency exchange rates between fiscal 2022 and fiscal
2021.

                                       27

Income Tax Expense

Avnet's effective tax rate on its income before income taxes was 16.9% in fiscal
2022. The effective tax rate for fiscal 2022 was favorably impacted primarily by
decreases to valuation allowances against deferred tax assets.

For fiscal 2021, the Company's effective tax rate on its income before income
taxes was a benefit of 11.7%. The effective tax rate for fiscal 2021 was
favorably impacted primarily by (i) a tax benefit arising from the reduction in
fair value of certain businesses, resulting in losses that can be carried back
under U.S. tax law and, (ii) the mix of income in lower tax jurisdictions,
partially offset by (iii) increases to unrecognized tax benefit reserves.

See Note 9, "Income taxes" to the Company's consolidated financial statements
included in Item 8 of this Annual Report on Form 10-K for further discussion on
the effective tax rate.

Net Income

As a result of the factors described in the preceding sections of this MD&A, the
Company's net income in fiscal 2022 was $692.4 million, or earnings per share on
a diluted basis of $6.94, compared with fiscal 2021 net income of $193.1
million, or earnings per share on a diluted basis of $1.93.

Comparison of fiscal year 2021 to fiscal year 2020

For comparison of the Company's results of operations between fiscal 2021 and
fiscal 2020, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Part II, Item 7 of the Company's Annual Report on
Form 10-K for the fiscal year ended July 3, 2021 filed with the SEC on August
13, 2021.

Cash and capital resources

Cash flow

Cash flow from operating activities

The Company used $219.3 million of cash from its operating activities in fiscal
2022 as compared to $90.9 million of cash generated in fiscal 2021. These
operating cash flows are comprised of: (i) cash flows generated from net income,
adjusted for the impact of non-cash and other items, which includes depreciation
and amortization expense, 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 to
support sales growth was $1.09 billion during fiscal 2022, including increases
in accounts receivable of $1.13 billion and inventories of $1.22 billion, offset
by increases in accounts payable of $1.13 billion and accrued expenses and other
of $134.4 million. Comparatively, cash used for working capital and other was
$372.5 million during fiscal 2021, including increases in accounts receivable of
$615.4 million and inventories of $409.1 million, offset by increases in
accounts payable of $621.0 million and accrued expenses and other of $30.9
million.

Cash flow from financing activities

During fiscal 2022, the Company received net proceeds of $300.0 million as a
result of the issuance of $300.0 million of 5.50% Notes due May 2032, $274.9
million under the Securitization Program, and $235.0 million from borrowings of
various bank credit facilities. During fiscal 2022, the Company repaid $354.3
million of notes, paid dividends on common stock of $98.5 million, and
repurchased $184.4 million of common stock.

During fiscal 2021, the Company received net proceeds of $297.7 million following the issuance of $300.0

                                       28

Contents

million of 3.00% Notes due May 2031 and $22.9 million under the Securitization
Program. During fiscal 2021, the Company repaid $305.1 million of notes and
$231.7 million under the Credit Facility, and paid dividends on common stock of
$84.3 million.

Cash flow from investing activities

During fiscal 2022, the Company used $48.9 million for capital expenditures
primarily related to warehouse and facilities, and information technology
hardware and software costs compared to $50.4 million in fiscal 2021. During
fiscal 2022, the Company received $90.4 million from investing activities
related to the liquidation of Company owned life insurance policies. During
fiscal 2021, the Company used $18.4 million of cash for acquisitions, which
is
net of the cash acquired.

Financing Transactions

The Company uses a variety of financing arrangements, both short-term and
long-term, to fund its operations in addition to cash generated from operating
activities. The Company also uses several funding sources to avoid becoming
overly dependent on one financing source, and to lower funding costs. These
financing arrangements include public debt, short-term and long-term bank loans,
a revolving credit facility (the "Credit Facility"), and an accounts receivable
securitization program (the "Securitization Program").

The Company has various lines of credit, financing arrangements and other forms
of bank debt in the U.S. and various foreign locations to fund working capital
including purchases of inventories, foreign exchange, overdraft, and letter of
credit needs of its wholly owned subsidiaries. Outstanding borrowings under such
forms of debt at the end of fiscal 2022 was $174.6 million.

As an alternative form of financing outside of the 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 receivables are
recorded within "Interest and other financing expenses, net" and are not
material.

See Note 7, "Debt" to the Company's consolidated financial statements included
in Item 8 of this Annual Report on Form 10-K for additional information on
financing transactions including the Credit Facility, the Securitization Program
and the outstanding Notes as of July 2, 2022.

Commitments and conditions

The Company's Credit Facility contains certain covenants with various
limitations on debt incurrence, share repurchases, dividends, investments and
capital expenditures, and also includes financial covenants requiring the
Company to maintain minimum interest coverage and leverage ratios. The Company
was in compliance with all such covenants as of July 2, 2022.

The Company's Securitization Program contains certain covenants relating to the
quality of the receivables sold. If these conditions are not met, the Company
may not be able to borrow any additional funds and the financial institutions
may consider this an amortization event, as defined in the Securitization
Program agreements, which would permit the financial institutions to liquidate
the accounts receivables sold to cover any outstanding borrowings. Circumstances
that could affect the Company's ability to meet the required covenants and
conditions of the Securitization Program include the Company's ongoing
profitability and various other economic, market, and industry factors. The
Company was in

                                       29

compliance with all these clauses from July 2, 2022.

Management does not believe that the covenants under the credit facility or the securitization program limit the Company’s ability to pursue its intended business strategy or its future financing needs.

See Liquidity below for a more in-depth discussion of the Company’s availability under these various facilities.

Liquidity

The Company had cash and cash equivalents of $153.7 million as of July 2, 2022,
of which $60.4 million was held outside the United States. As of July 3, 2021,
the Company had cash and cash equivalents of $199.7 million, of which $150.5
million was held outside of the United States.

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 used $219.3 million in
cash flows for operating activities during the fiscal year ended July 2, 2022,
to support the fiscal 2022 sales growth.

Liquidity is subject to many factors, such as normal business operations and
general economic, financial, competitive, legislative, and regulatory factors
that are beyond the Company's control. To the extent the cash balances held in
foreign locations cannot be remitted back to the U.S. in a tax efficient manner,
those cash balances are generally used for ongoing working capital, including
the need to purchase inventories, 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.

As of July 2, 2022, there were no borrowings outstanding under the Credit
Facility, with $1.2 million in letters of credit issued and $297.8 million
outstanding under the Securitization Program. During fiscal 2022, the Company
had an average daily balance outstanding under the Credit Facility of
approximately $541.4 million and $241.4 million under the Securitization
Program. As of July 2, 2022, the combined availability under the Credit Facility
and the Securitization Program was $1.40 billion. Availability under the
Securitization Program is subject to the Company having sufficient eligible
trade accounts receivable in the United States to support desired borrowings. In
August 2022, subsequent to the end of fiscal 2022, the Company amended and
extended the Credit Facility to expire in August 2027.

The Company has the following contractual obligations outstanding as of July 2,
2022 (in millions):

                                                                  Payments due by period
                                                    Less than                                 More than
Contractual Obligations                 Total        1 year       1-3 years     3-5 years      5 years
Long-term debt obligations(1)         $ 1,622.4    $     174.4   $     298.0   $     550.0   $     600.0
Interest expense on long-term debt
obligations(2)                            364.3           67.5         109.4          71.1         116.3
Operating lease obligations(3)            304.2           61.0          

82.3 48.9 112.0

(1) Includes amounts due within one year and excludes unamortized discount and

debt issuance costs.

(2) Represents interest charges due on debt using fixed interest rates

fixed rate debt and assuming the same interest rate at the end of fiscal year 2022

for variable rate debt.

(3) Excludes theoretical interest on operating lease debts.

                                       30

  Table of Contents

The Company acquires inventories in the normal course of business throughout the
year through the issuance of purchase orders to suppliers. During fiscal 2022,
the Company's cost of sales, substantially all of which related to the
underlying purchase of inventories was $21.3 billion and the Company had $4.2
billion of inventories as of July 2, 2022. The Company expects to continue to
purchase sufficient inventory to meet its customers' demands in fiscal year
2023, much of which relates to outstanding purchase orders at the end of fiscal
2022. Outstanding purchase orders with suppliers may be
non-cancellable/non-returnable at the point such orders are issued, or may
become non-cancellable at some point in the future, typically within 30 days to
90 days from the requested delivery date of inventories. The majority of the
purchase orders related to inventories expected to be received during the first
quarter of fiscal 2023, are subject to such non-cancellable terms and
conditions.

At July 2, 2022, the Company had an estimated liability for income tax
contingencies of $134.6 million, which is not included in the above table. Cash
payments associated with the settlement of these liabilities that are expected
to be paid within the next 12 months is $1.1 million. The settlement period for
the remaining amount of the unrecognized tax benefits, including related accrued
interest and penalties, cannot be determined, and therefore was not included in
the table.

As of July 2, 2022, the Company may repurchase up to an aggregate of $531.3
million of shares of the Company's common stock through the 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. During
fiscal 2022, the Company repurchased $193.3 million of common stock.

The Company has historically paid quarterly cash dividends on its common shares, and future dividends are subject to the approval of the Board of Directors. During the fourth quarter of fiscal 2022, the Board of Directors approved a dividend of $0.26 per share, resulting in $25.2 million dividend payments during the quarter.

The Company continually 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.

Critical Accounting Policies

The Company's consolidated financial statements have been prepared in accordance
with GAAP. The preparation of these consolidated financial statements requires
the Company to make estimates and assumptions that affect the reported amounts
of assets, liabilities, sales and expenses. These estimates and assumptions are
based upon the Company's continual evaluation of available information,
including historical results and anticipated future events. Actual results may
differ materially from these estimates.

The Securities and Exchange Commission defines critical accounting policies as
those that are, in management's view, most important to the portrayal of the
Company's financial condition and results of operations and that require
significant judgments and estimates. Management believes the Company's most
critical accounting policies at the end of fiscal 2022 relate to:

                                       31

Inventory valuation

Inventories are recorded at the lower of cost or estimated net realizable value.
Inventory cost includes the purchase price of finished goods and any freight
cost incurred to receive the inventory into the Company's distribution centers.
The Company's inventories include electronic components sold into changing,
cyclical, and competitive markets, so inventories may decline in market value or
become obsolete.

The Company regularly evaluates inventories for expected customer demand,
obsolescence, current market prices, and other factors that may render
inventories less marketable. Write-downs are recorded so that inventories
reflect the estimated net realizable value and take into account the Company's
contractual provisions with its suppliers, which may provide certain protections
to the Company for product obsolescence and price erosion in the form of rights
of return, stock rotation rights, obsolescence allowances, and price
protections. Because of the large number of products and suppliers and the
complexity of managing the process around price protections and stock rotations,
estimates are made regarding the net realizable value of inventories.
Additionally, assumptions about future demand and market conditions, as well as
decisions to discontinue certain product lines, impact the evaluation of whether
to write-down inventories. If future demand changes or actual market conditions
are less favorable than assumed, then management evaluates whether additional
write-downs of inventories are required. In any case, actual net realizable
values could be different from those currently estimated.

Accounting for income taxes

Management's judgment is required in determining income tax expenses and
unrecognized tax benefits, in measuring deferred tax assets and liabilities, and
valuation allowances recorded against net deferred tax assets. Recovering net
deferred tax assets depends on the Company's ability to generate sufficient
future taxable income in certain jurisdictions. In addition, when assessing the
need for valuation allowances, the Company considers historic levels and types
of income, expectations and risk associated with estimates of future taxable
income, and ongoing prudent and feasible tax planning strategies. If the Company
determines that it cannot realize all or part of its deferred tax assets in the
future, it may record additional valuation allowances against the deferred tax
assets with a corresponding increase to income tax expense in the period such
determination is made. Similarly, if the Company determines that it can realize
all or part of its deferred tax assets that have an associated valuation
allowance established, the Company may release a valuation allowance with a
corresponding benefit to income tax expense in the period such determination is
made.

The Company establishes contingent liabilities for potentially unfavorable
outcomes of positions taken on certain tax matters. These liabilities are based
on management's assessment of whether a tax benefit is more likely than not to
be sustained upon examination by tax authorities. The anticipated and actual
outcomes of these matters may differ, which may result in changes in estimates
to such liabilities. To the extent such changes in estimates are necessary, the
Company's effective tax rate may fluctuate. In accordance with the Company's
accounting policy, accrued interest and penalties related to unrecognized tax
benefits are recorded as a component of income tax expense.

In determining the Company's income tax expense, management considers current
tax regulations in the numerous jurisdictions in which it operates, including
the impact of tax law and regulation changes in the jurisdictions the Company
operates in. The Company exercises judgment for interpretation and application
of such current tax regulations. Changes to such tax regulations or
disagreements with the Company's interpretation or application by tax
authorities in any of the Company's major jurisdictions may have a significant
impact on the Company's income tax expense.

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Contents

See Note 9 to the Company's consolidated financial statements included in Item 8
of this Annual Report on Form 10-K for further discussion on income tax expense,
valuation allowances and unrecognized tax benefits.

Recently issued accounting pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic
848): Facilitation of the Effects of Reference Rate Reform on Financial
Reporting ("ASU No. 2020-04"), which provides optional guidance to ease the
potential burden in accounting for reference rate reform on financial reporting.
The new guidance provides optional expedients and exceptions for applying GAAP
to transactions affected by reference rate reform if certain criteria are met.
In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic
848): Scope ("ASU No. 2021-01"), to clarify certain optional expedients and
exceptions in Topic 848 for contract modifications and hedge accounting to apply
to derivatives that are affected by the discounting transition. Both ASU No.
2020-04 and ASU No. 2021-01 are effective upon issuance through December 31,
2022. The Company plans to adopt ASU 2020-04 and ASU 2021-01 when LIBOR is
discontinued and does not currently expect a material impact on the Company's
consolidated financial statements as the Company's debt agreements already
contemplate the discontinuation of LIBOR.

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