Avnet 2008 Annual Report Download - page 37

Table of Contents
cash and cash equivalents to fund three additional acquisitions that closed in the first quarter of fiscal 2009. The
Company has no other significant financial commitments outside of normal debt and lease maturities discussed in
Capital Structure and Contractual Obligations. Management believes that Avnet’s borrowing capacity, its current
cash availability and the Company’s expected ability to generate operating cash flows are sufficient to meet its
projected financing needs. Generally, the Company is more likely to utilize operating cash flows for working capital
requirements in a growing electronic component and computer products industry. However, additional cash
requirements for working capital are generally expected to be offset by the operating cash flows generated by the
Company’s enhanced profitability resulting from the Company’s cost reductions achieved in recent years and its
focus on profitable growth. The 5.875% Notes are the next significant public debt maturity due to mature in 2014. In
addition, the Company may redeem some or all of the 2% Convertible Senior Debentures for cash any time on or
after March 20, 2009 at the Debentures’
full principal amount plus accrued and unpaid interest, if any. Holders of the
Debentures may require the Company to purchase, in cash, all or a portion of the Debentures on March 15, 2009,
2014, 2019, 2024 and 2029, or upon a fundamental change, as defined, at the Debentures’ full principal amount plus
accrued and unpaid interest, if any. In December 2004, the Company made an irrevocable election to satisfy the
principal portion of the Debentures in cash and settle the remaining obligation with shares of common stock if and
when the Debentures are converted (see Financing Transactions for further discussion).
The following table highlights the Company’s liquidity and related ratios for the past two years:
COMPARATIVE ANALYSIS — LIQUIDITY
The Company’s quick assets (consisting of cash and cash equivalents and receivables) increased 9.5% from
fiscal 2007 to fiscal 2008 due to an increase in receivables volume as a result of acquisitions that occurred during
fiscal 2008 and an increase in cash and cash equivalents over prior year. Current assets also increased, similarly, due
to acquisitions that occurred during fiscal 2008. Current liabilities were essentially flat. As a result of the factors
noted above, total working capital increased by 17.7% during fiscal 2008. Total debt increased slightly by 1.3% since
fiscal year end 2007 primarily due to debt acquired in connection with the fiscal 2008 acquisitions. Total capital grew
primarily due to net income and foreign currency translation adjustments. Finally, the debt to capital ratio decreased
to 22.9% from 26.2% as a result of the growth in capital since fiscal year end 2007.
Long-Term Contractual Obligations
The Company has the following contractual obligations outstanding as of June 28, 2008 (in millions):
34
Years Ended
June 28,
June 30,
Percentage
2008
2007
Change
(Dollars in millions)
Current Assets
$
5,971.1
$
5,488.8
8.8
%
Quick Assets
4,007.9
3,660.4
9.5
Current Liabilities
2,779.6
2,777.0
0.1
Working Capital
3,191.5
2,711.8
17.7
Total Debt
1,225.3
1,209.4
1.3
Total Capital (total debt plus total shareholders
’
equity)
5,360.0
4,610.0
16.3
Quick Ratio
1.4:1
1.3:1
Working Capital Ratio
2.1:1
2.0:1
Debt to Total Capital
22.9
%
26.2
%
Due in Less
Due in
Due in
Due After
Total
Than 1 Year
1
-
3 Years
4
-
5 Years
5 Years
Long-term debt, including amounts due
within one year(1)
$
1,228.0
$
43.8
$
10.3
$
22.2
$
1,151.7
Operating leases
$
259.4
$
71.3
$
100.7
$
58.0
$
29.4
(1)
Excludes discount on long
-
term notes