Avnet 2000 Annual Report Download - page 28

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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. Income taxes (continued):
The significant components of deferred tax assets and liabilities included on the balance sheet were as follows:
June 30, July 2,
(Thousands) 2000 1999
Deferred tax assets:
Inventory valuation $ 25,610 $ 16,388
Accounts receivable valuation 12,215 6,434
Foreign tax loss carry-forwards 52,436 29,084
Various accrued liabilities and other 40,269 23,328
130,530 75,234
Deferred tax liabilities:
Depreciation and amortization of
property, plant and equipment 3,069 2,845
Other 4,679 1,287
7,748 4,132
Net deferred tax assets $ 122,782 $ 71,102
8. Pension and profit sharing plans:
The Company’s noncontributory defined benefit pension plan (the “Plan”) and its 401(k) plan cover substantially all domestic employees, except for those
who were employed at Channel Master, which was sold during 1998, and who were covered by a profit sharing plan. The expense recorded in 1998 related
to the profit sharing plan was $427,000. The expense relating to the Avnet 401(k) Plan for 2000, 1999 and 1998 amounted to $1,332,000, $711,000 and
$553,000, respectively. The noncontributory pension plan was amended as of January 1, 1994 to provide defined benefits pursuant to a cash balance fea-
ture whereby a participant accumulates a benefit based upon a percentage of current salary, which varies with age, and interest credits. At June 30, 2000,
the market value of the pension plan assets was $201,721,000. These assets were comprised of common stocks (72%), U.S. Government securities (5%),
corporate debt obligations (21%), and money market funds (2%).
The following tables outline changes in benefit obligations, plan assets, and the funded status of the Plan as of the end of 2000 and 1999:
June 30, July 2,
(Thousands) 2000 1999
Changes in benefit obligations:
Benefit obligations at beginning of year $ 140,203 $ 140,983
Service cost 8,588 8,525
Interest cost 10,515 9,510
Actuarial (gain) loss (1,861) (11,436)
Benefits paid (10,621) (7,379)
Benefit obligations at end of year $ 146,824 $ 140,203
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. Pension and profit sharing plans (continued):
June 30, July 2,
2000 1999
Change in plan assets:
Fair value of plan assets at beginning of year $ 189,778 $ 167,451
Actual return on plan assets 22,464 29,706
Benefits paid (10,621) (7,379)
Contributions 100 —
Fair value of plan assets at end of year $ 201,721 $ 189,778
Information on funded status of plan and the amount recognized:
Funded status of the plan $ 54,897 $ 49,575
Unrecognized transition asset (1,980) (4,810)
Unrecognized net actuarial gain (47,808) (38,151)
Unamortized prior service credit (1,972) (2,293)
Prepaid pension cost recognized in the balance sheet $ 3,137 $ 4,321
Weighted average assumptions used to calculate actuarial present values of benefit obligations were as follows: 2000 1999
Discount rate 7.75% 7.0%
Expected return on plan assets 9.50% 9.0%
Under the cash balance plan, service costs are based solely on current year salary levels; therefore, projected salary increases are not taken into account.
Components of net periodic benefit costs during the last three years are as follows: Years Ended
June 30, July 2, June 26,
(Thousands) 2000 1999 1998
Service Cost $ 8,588 $ 8,525 $ 6,860
Interest cost 10,515 9,510 9,056
Expected return on plan assets (14,668) (12,352) (11,311)
Amortization of transition asset (2,830) (2,829) (2,830)
Recognized net actuarial gain — 127 —
Amortization of prior service credit (321) (321) (321)
Net periodic benefit cost $ 1,284 $ 2,660 $ 1,454
Not included in the above tabulations are pension plans of certain non-U.S. subsidiaries which are not material.