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 endedJanuary 2, 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 Report on Form 10-Q for the fiscal quarter endedOctober 3, 2020 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 six months of fiscal 2021 endedJanuary 2, 2021 , contained 27 weeks and the first six months of fiscal 2020 endedDecember 28, 2019 contained 26 weeks. This extra week in the first six 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 excluding (i) restructuring, integration and other expenses,
? (see Restructuring, Integration and Other Expenses in this MD&A) and (ii)
amortization of acquired intangible assets. Operating income excluding such
amounts is referred to as "adjusted operating income."
The reconciliation of operating income to adjusted operating income is presented
in the following table:
Second Quarters Ended Six Months Ended
January 2, December 28, January 2, December 28,
2021 2019 2021 2019
(Thousands)
Operating income $ 57,221 $ 46,475 $ 75,723 $ 109,212
Restructuring, integration and other
expenses 11,948 14,265 38,369 38,863
Amortization of acquired intangible
assets and other 10,417 21,454 30,592 41,532
Adjusted operating income $ 79,586 $ 82,194 $ 144,684 $ 189,607
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 an extensive ecosystem delivering 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 and incorporated inNew York in 1955, 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) theAmericas , (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 the extent of 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 Report on Form 10-Q for the fiscal quarter endedOctober 3, 2020 . Executive Summary Sales of$4.67 billion were up 2.9% year over year as compared to prior year sales of$4.53 billion . Organic sales increased 2.9% and increased 0.7% in constant currency year-over-year. The organic sales increase is the result of the sales improvement in theAsia region, partially offset primarily by lower sales of TI products due to the termination of the Company's TI distribution agreement.
Gross profit margin of 11.0% decreased 64 basis points compared to 11.6% in the second quarter of fiscal 2020 primarily due to a combination of geographical market mix, product and customer mix, and overall declines in gross profit margin due to the negative impacts from the COVID-19 pandemic. Operating income of$57.2 million increased$10.7 million or 23.1% as compared to second quarter of fiscal 2020 operating income. Operating income margin was 1.2% in the second quarter of fiscal 2021 as compared to 1.0% in the second quarter of fiscal 2020. Adjusted operating income margin was 1.7% in the second quarter of fiscal 2021 as compared to 1.8% in the second quarter of fiscal 2020, a decline of 11 basis points. The decrease in adjusted operating income margin is primarily due to the decrease in gross profit margin, partially offset by reductions in selling, general and administrative expenses. 22 Table of Contents Sales The following table presents the reconciliation of reported sales to organic sales for the second quarter and first six months of fiscal 2021 by region and by operating group. Reported sales were the same as organic sales in the second quarter and first six months of fiscal 2020. Quarter Ended Six Months Ended Sales As Reported Organic Organic and Sales Sales Organic Sales Organic TI Sales Adj for TI As Reported Estimated Sales TI Sales Adj for TI Q2-Fiscal Q2-Fiscal Q2-Fiscal Q2-Fiscal Extra Q2-Fiscal Q2-Fiscal Q2-Fiscal 2021 2021(1) 2021(1) 2021 Week(2) 2021 2021(1) 2021(1) (Thousands) Avnet$ 4,668,172 $ 49,568 $ 4,618,604 $ 9,391,232 $ 306,000 $ 9,085,232 $ 290,552 $ 8,794,680 Avnet by region Americas$ 1,101,450 $ 13,969 $ 1,087,481 $ 2,307,145 $ 77,000 $ 2,230,145 $ 82,469 $ 2,147,676 EMEA 1,346,347 20,839 1,325,508 2,827,020 97,000 2,730,020 123,749 2,606,271 Asia 2,220,375 14,760 2,205,615 4,257,067 132,000 4,125,067 84,334 4,040,733 Avnet by operating group EC$ 4,342,386 $ 49,568 $ 4,292,818 $ 8,724,535 $ 284,000 $ 8,440,535 $ 290,552 $ 8,149,983 Farnell 325,786 - 325,786 666,697 22,000 644,697 - 644,697 ___________
Sales adjusted for the impact of the termination of the Texas Instruments
("TI") distribution contract, which was completed in
(1) TI products were
2021 and fiscal 2020, respectively; and
first six months of fiscal 2021 and fiscal 2020, respectively.
(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
second quarter and first six months of fiscal 2021 as compared to fiscal 2020 by
region and by operating group.
Quarter Ended Six Months Ended
Organic Organic
Sales Sales Sales Organic Sales
As Reported Adj for TI As Reported Sales Adj for TI
Sales Year-Year % Year-Year % Sales Year-Year % Organic Year-Year % Year-Year %
As Reported Change in Change in As 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 2.9 % 0.7 % 9.3 % 2.5 % 0.7 % (0.9) % (2.7) % 3.7 %
Avnet by region
Americas (7.2) % (7.2) % (0.5) % (4.0) % (4.0) % (7.2) % (7.2) % (2.7) %
EMEA (5.6) (11.4) (4.5) (2.4) (7.4) (5.8) (10.8) (6.2)
Asia 15.5 14.6 25.7 10.1 9.6 6.7 6.2 15.1
Avnet by operating group
EC 3.3 % 1.1 % 10.5 % 2.7 % 0.9 % (0.7) % (2.4) % 4.5 %
Farnell (1.6) (4.5) (4.5) (0.1) (2.5) (3.3) (5.8) (5.8)
___________
(1) Sales growth rates excluding the impact of the termination of the TI
distribution agreement, which was completed in December 2020 .
Sales of$4.67 billion for the second quarter of fiscal 2021 were up$133.4 million , or 2.9%, from the prior year second quarter sales of$4.53 billion . Organic sales in constant currency in the second quarter of fiscal 2021 increased by 0.7% over the prior year second quarter as a result of increased sales in theAsia region, partially offset by the decline in TI sales year over year and to a lesser extent the negative impacts of COVID-19. 23 Table of Contents EC sales of$4.34 billion in the second quarter of fiscal 2021 increased$138.8 million or 3.3% from the prior year second quarter sales of$4.20 billion . On an organic basis, EC sales increased 3.3% year over year and 1.1% in constant currency. This increase was due to sales growth in theAsia region, partially offset by lower sales of TI products and the negative impacts of COVID-19 and the related impacts on market demand. Farnell sales for the second quarter of fiscal 2021 were$325.8 million , a decrease of$5.4 million or 1.6% from the prior year second quarter sales of$331.2 million . Organic sales decreased$5.4 million or 1.6% year over year and decreased 4.5% in constant currency. These decreases were primarily a result of the negative impacts of COVID-19 and the related impact on market demand. On a regional basis, organic sales in the second quarter of fiscal 2021 declined 7.2% in theAmericas , 11.4% in EMEA in constant currency and increased 14.6% inAsia in constant currency. Sales for the first six months of fiscal 2021 were$9.39 billion , an increase of$226.4 million as compared to sales of$9.16 billion for the first six months of fiscal 2020. The increase in sales was primarily due to growth in theAsia 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 and to a lesser extent the negative impacts of COVID-19 and the related impacts on market demand.
Gross Profit and Gross Profit Margins
Gross profit for the second quarter of fiscal 2021 was$511.3 million , a decrease of$14.4 million , or 2.7%, from the second quarter of fiscal 2020 gross profit of$525.6 million . Gross profit margin decreased to 11.0% or 64 basis points from the second quarter of fiscal 2020 gross profit margin of 11.6% 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 a combination of geographical market mix, unfavorable changes in product and customer mix, and overall declines in gross profit margin due to current market conditions. Sales in the higher gross profit margin western regions represented approximately 52% of sales in the second quarter of fiscal 2021 as compared to 58% during the second quarter of fiscal 2020. Gross profit and gross profit margin was$1.03 billion and 10.9%, respectively, for the first six months of fiscal 2021 as compared with$1.07 billion and 11.7%, respectively, for the first six months of fiscal 2020. The decline in gross profit margin during the first six months of fiscal 2021 compared to the first six months of fiscal 2020 is primarily due to a combination of geographical market mix, unfavorable changes in product and customer mix, and overall declines in gross profit margin due to current market conditions.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A expenses") were $442.1
million in the second quarter of fiscal 2021, a decrease of $22.8 million , or
4.9%, from the second 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 of the 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
second quarter of fiscal 2021, SG&A expenses as a percentage of sales were 9.5%
and as a percentage of gross profit were 86.5%, as compared with 10.3% and
88.4%, respectively, in the second quarter of fiscal 2020. The decrease in SG&A
expenses as a percentage of gross profit is primarily the result of the cost
savings from restructuring activities and lower amortization expense, partially
offset by foreign currency due to the weakening of the U.S. Dollar and from the
decrease in gross profit margin.
SG&A expenses for the first six months of fiscal 2021 were $913.2 million , or
9.7% of sales, as compared with $921.4 million , or 10.1% of sales, in the first
six 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 weakening of the U.S. Dollar and from the decrease in gross profit margin.
SG&A expenses were 88.9% of gross profit in the first six months of 2021 as
compared with 86.2% in the first six months of fiscal 2020.
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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 costs. These costs also relate to the restructuring of the Company's information technology, distribution center footprint and business operations. In addition, the Company incurred integration and other costs and benefitted from a gain on a legal settlement. Integration costs are primarily related to the integration of certain regional and global businesses and 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. Included in restructuring, integration and other expenses in the first six months of fiscal 2021 is a gain of$8.2 million resulting from a legal settlement. The Company recorded restructuring, integration and other expenses of$11.9 million during the second quarter of fiscal 2021. The Company recorded$7.6 million of restructuring costs in the second quarter of fiscal 2021, which are expected to provide approximately$12.0 million in annual operating expense savings once such restructuring actions are completed. During the second quarter of fiscal 2021, the Company also incurred integration costs of$7.3 million , partially offset by a net reversal of other expenses of$1.2 million and a reversal of$1.8 million for changes in estimates for costs associated with prior year restructuring actions. The after-tax impact of restructuring, integration and other expenses were$9.4 million and$0.09 per share on a diluted basis. During the first six months of fiscal 2021, the Company incurred restructuring costs of$34.5 million , integration costs of$14.6 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$0.4 million . The after tax impact of restructuring, integration and other expenses for the first six months of fiscal 2021 was$31.2 million and$0.31 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 Operating income for the second quarter of fiscal 2021 was$57.2 million , an increase of$10.7 million , or 23.1%, from the second quarter of fiscal 2020 operating income of$46.5 million . The year-over-year increase in operating income was primarily driven by lower SG&A expenses, partially offset by a decline in gross profit margin as compared to the second quarter of fiscal 2020. Adjusted operating income for the second quarter of fiscal 2021 was$79.6 million , a decrease of$2.6 million , or 3.2%, from the second quarter of fiscal 2020. The year-over-year decrease in adjusted operating income was primarily driven by the decline in gross profit margin discussed further above, partially offset by the reduction in SG&A expenses. EC operating income margin increased 17 basis points year over year to 2.4% and Farnell operating income margin decreased 155 basis points year over year to 4.5%. The decline in Farnell was primarily driven by the decline in gross profit margin.
Operating income for the first six months of fiscal 2021 was$75.7 million , or 0.8% of consolidated sales, as compared with operating income of$109.2 million , or 1.2% of consolidated sales in the first six months of fiscal 2020. Adjusted operating income for the first six months of fiscal 2021 was$144.7 million , a decrease of$44.9 million , or 23.7%, from the first six 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 reduction in SG&A expenses. 25 Table of Contents
Interest and Other Financing Expenses, Net and Other (Expense) Income, Net
Interest and other financing expenses in the second quarter of fiscal 2021 was$21.5 million , a decrease of$12.4 million , or 36.6%, as compared with interest and other financing expenses of$33.9 million in the second quarter of fiscal 2020. Interest and other financing expenses in the first six months of fiscal 2021 was$43.8 million , a decrease of$23.7 million , or 35.2%, as compared with interest and other financing expenses of$67.5 million in the first six months of fiscal 2020. The decrease in interest and other financing expenses in the first six months of fiscal 2021 compared to the first six months of fiscal 2020 was primarily related to lower outstanding borrowings in the first six months of fiscal 2021. During the second quarter of fiscal 2021, the Company had$1.3 million of other expense as compared with$2.0 million of other expense in the second quarter of fiscal 2020. During the first six months of fiscal 2021, the Company had$20.8 million of other expense as compared with$3.0 million of other income in the first six months of fiscal 2020. The year-over-year differences in other (expense) income was primarily due to$15.2 million of equity investment impairment expense included in other expense in the first six months of fiscal 2021 and differences in foreign currency exchange rates between the first six months of fiscal 2021 and fiscal 2020. Income Tax Expense The Company's effective tax rate on its income before taxes was 44.3% in the second quarter of fiscal 2021. During the second quarter of fiscal 2021, the Company's effective tax rate was unfavorably impacted primarily by increases to valuation allowances, partially offset by the mix of income in lower tax jurisdictions. For the first six months of fiscal 2021, the Company's effective tax rate on its income before taxes was 97.5%. The effective tax rate for the first six months of fiscal 2021 was unfavorably impacted primarily by increases to valuation allowances, partially offset by the mix of income in lower tax jurisdictions. Net Income As a result of the factors described in the preceding sections of this MD&A, the Company's net income for the second quarter of fiscal 2021 was$19.2 million , or$0.19 per share on a diluted basis, as compared with net income of$3.7 million , or$0.04 per share on a diluted basis, in the second 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 six months of fiscal 2021 was$0.3 million , or$0.00 per share on a diluted basis, as compared with net income of$45.4 million , or$0.44 per share on a diluted basis, in the first six months of
fiscal 2020.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Cash Flow from Operating Activities
During the first six months of fiscal 2021, the Company generated$207.4 million of cash flow from operations compared to$344.2 million of cash generated in the first six 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 generated from working capital and other was$57.3 million during the first six months of fiscal 2021, including an increase in accounts payable of$130.8 million and decrease in inventories of$51.2 million , offset by an increase in accounts receivable of$94.8 million and a decrease in accrued expenses and other of$29.8 million . Comparatively, cash generated from working capital and other was$155.2 million during the first six months of fiscal 2020, including decreases in accounts receivable of$185.6 million and inventories of$94.2 million , offset by decreases in accounts payable of$52.7 million and accrued expenses and other of$71.9 million . 26 Table of Contents
Cash Flow from Financing Activities
During the first six months of fiscal 2021, the Company received net proceeds of$11.8 million under the Securitization Program and made a net repayment of$239.4 million under the Credit Facility. During the first six months of fiscal 2021, the Company paid dividends on common stock of$41.5 million . During the first six months of fiscal 2020, the Company made net repayments of$35.4 million under the Securitization Program. During the first six months of fiscal 2020, the Company paid dividends on common stock of$42.4 million and repurchased$198.6 million of common stock.
Cash Flow from Investing Activities
During the first six months of fiscal 2021, the Company used$30.0 million for capital expenditures primarily related to warehouse and facilities, and information technology hardware and software costs compared to$44.3 million for capital expenditures in the first six months of fiscal 2020. During the first six 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$13.1 million for other investing activities during the first six 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 ofJanuary 2, 2021 . The Company was in compliance with all covenants under the Credit Facility and the Securitization Program as ofJanuary 2, 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 second quarter of fiscal 2021 was$1.5 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$376.3 million as ofJanuary 2, 2021 , of which$332.7 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 second 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$11.8 million in borrowings outstanding under the Securitization Program, resulting in approximately$1.57 billion of total availability as ofJanuary 2, 2021 . Availability under the Securitization Program is subject to the Company having sufficient eligible trade accounts receivable in theAmericas 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, which were amended in the first quarter of fiscal 2021. 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 ofJanuary 2, 2021 .
During the second quarter and first six months of fiscal 2021, the Company had an average daily balance outstanding of approximately$77.6 million and$82.0 million , respectively, under the Credit Facility and approximately$222.3 million and$257.4 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$593.4 million in cash flows from operating activities over the trailing four fiscal quarters endedJanuary 2, 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, including the$300.0 million of 3.75% Notes due inDecember 2021 . Management believes the Company will have adequate access to the capital markets, if needed. The Company has historically and believes it will have the ability in the future to generate operating cash flows in periods
of declining sales. 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 ofJanuary 2, 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.
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 second quarter of fiscal 2021, the Board of Directors
approved a dividend of
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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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