Avnet 2002 Annual Report Download - page 68

AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
principle in the Ñrst quarter of 2002 and is reÖected in the accompanying consolidated statement of operations
for the year ended June 28, 2002.
The magnitude of the impairment charge was signiÑcantly impacted by the timing of the eÅective date of
when the fair value analysis was performed and the designation of the reporting unit structure. Since the
Company adopted SFAS 142 on June 30, 2001, the fair value analysis was required to be completed as of that
date. Due to the diÇcult business and economic conditions at that date, which severely impacted the market
sectors in which the Company operates, and the uncertainty as to when such conditions would materially
improve, the fair value of the Company's businesses was signiÑcantly less than it might have been at other
times. In other words, in a cyclical business, the timing of a valuation such as this may be an important factor
in the outcome of the valuation exercise. The reporting units with the most signiÑcant impairment of goodwill
are in Europe where the Company has not yet generated an acceptable level of proÑts and cash Öows. In
addition, the deÑned reporting unit structure has resulted in an impairment of goodwill which includes
goodwill related to certain recent acquisitions that otherwise might not have been impaired.
The following table presents the carrying amount of goodwill, by reportable segment, for the periods
presented:
Electronics Computer Applied
Marketing Marketing Computing Total
(Thousands)
Carrying value at June 29, 2001 ÏÏÏÏÏÏÏÏÏÏÏ $1,139,430 $265,433 $ Ì $1,404,863
Cumulative eÅect of change in accounting
principle ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (563,492) (17,003) Ì (580,495)
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 15,460 4,769 Ì 20,229
Carrying value at June 28, 2002 ÏÏÏÏÏÏÏÏÏÏÏ $ 591,398 $253,199 $ Ì $ 844,597
7. External Ñnancing:
Short-term debt consists of the following:
June 28, June 29,
2002 2001
(Thousands)
Bank credit facilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $54,158 $ 643,200
U.S. commercial paperÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 122,201
4.5% Convertible Notes due 2004ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,031 207,000
Floating Rate Notes due October 17, 2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 325,000
Other debt due within one yearÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,120 4,728
Short-term debtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $59,309 $1,302,129
Bank credit facilities consist of various committed and uncommitted lines of credit with Ñnancial
institutions utilized primarily to support the working capital requirements of foreign operations. The weighted
average interest rates on the bank credit facilities at June 28, 2002 and June 29, 2001 were 3.4% and 4.6%,
respectively. The weighted average interest rate on U.S. commercial paper was 4.3% at June 29, 2001.
As of its acquisition of Kent on June 8, 2001, Avnet assumed Kent's 4.5% Convertible Notes due 2004
(the ""Notes''). During the Ñrst quarter of 2002, virtually all holders of the Notes exercised their ""put'' options
by selling the Notes back to the Company. As of June 28, 2002, $3,031,000 in Notes remain outstanding. The
Company has the right to redeem all remaining Notes outstanding upon 30-day prior notice.
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