Avnet 2012 Annual Report Download - page 51

Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company acquired 100% ownership for all of the businesses mentioned above, except for one in which the Company acquired a
60%
controlling interest. The non-controlling interest was recorded at its estimated fair value but was not material.
Gain on bargain purchase and other
In January 2012, the Company acquired Unidux Electronic Limited ("UEL"), a Singapore publicly traded company, through a tender offer.
After assessing the assets acquired and liabilities assumed, the consideration paid was below book value even though the price paid per share
represented a premium to the trading levels at that time. Accordingly, the Company recognized a gain on bargain purchase of $4,317,000 pre-
and after tax and $0.03 per share on a diluted basis. In addition, during fiscal 2012, the Company recognized a loss of $1,399,000 pre-
tax,
$854,000 after tax and $0.01
per diluted share included in "Gain on bargain purchase and other" on the consolidated statements of operations
related to a write-down of an investment in a small technology company and the write-
off of certain deferred financing costs associated with the
early termination of a credit facility (see Note 7 for further discussion of the credit facility).
During fiscal 2011, the Company acquired Unidux, Inc. (“Unidux”),
an electronics component distributor in Japan, which is reported as
part of the EM Asia region. Unidux was a publicly traded company which shares were trading below its book value for a period of time. In a
tender offer, Avnet offered a purchase price per share for Unidux that was above the prevailing trading price at that time. Even though the
purchase price was below book value, the Unidux shareholders tendered their shares. As a result, the Company recognized a gain on bargain
purchase of $30,990,000 pre- and after tax and $0.20
per share on a diluted basis. Prior to recognizing the gain, the Company reassessed the
assets acquired and liabilities assumed in the acquisition. Also during fiscal 2011 , the Company recognized a loss of $6,308,000 pre-
tax,
$3,857,000 after tax and $0.02 per share on a diluted basis included in “Gain on bargain purchase and other” related to the write-
down of prior
investments in smaller technology start-up companies (see Note 5 for other amounts included in “Gain on bargain purchase and other”).
Investments and divestitures
During fiscal 2011, the Company completed the divestiture of New ProSys Corp. (“ProSys”), a value-
added reseller and provider of IT
infrastructure solutions. Avnet acquired ProSys as part of the Bell acquisition on July 6, 2010. Total consideration included a cash payment at
closing, a short-term receivable and a three-year earn-out based upon ProSys’
anticipated results. As a result of the divestiture, the Company
received cash proceeds of $19,108,000 and wrote off goodwill associated with the ProSys business (see Note 6). No
gain or loss was recorded as
a result of the divestiture.
During fiscal 2010 , the Company recognized a gain on the sale of assets as a result of certain earn-
out provisions associated with the prior
sale of the Company’s equity investment in Calence LLC. The gain on sale of assets was $8,751,000 pre-tax, $5,370,000 after tax and $0.03
per
share on a diluted basis. Also during fiscal 2011, the Company sold a cost method investment and received proceeds of approximately
$3,034,000 .
3. Accounts receivable securitization
In August 2011, the Company amended its accounts receivable securitization program (the “Program”)
with a group of financial
institutions to allow the Company to sell, on a revolving basis, an undivided interest of up to $750,000,000 ( 600,000,000
prior to the
amendment) in eligible U.S. receivables while retaining a subordinated interest in a portion of the receivables. The eligible receivables are sold
through a wholly-owned bankruptcy-
remote special purpose entity that is consolidated for financial reporting purposes. Such eligible receivables
are not directly available to satisfy claims of the Company’s creditors. Financing under the Program does not qualify as off-
balance sheet
financing, as a result, the receivables and related debt obligation remain on the Company’
s consolidated balance sheet as amounts are drawn on
the Program. The Program has a one year term that expires at the end of August 2012
, which is expected to be renewed for another year on
comparable terms. The Program contains certain covenants, all of which the Company was in compliance with as of June 30, 2012. There were
$670,000,000 in borrowings outstanding under the Program at June 30, 2012 and $160,000,000 as of July 2, 2011
. (See Note 7 for discussion of
other short-term and long-term debt outstanding). Interest on borrowings is calculated using a
base rate or a commercial paper rate plus a spread
of 0.35% . The facility fee is 0.35%
. Expenses associated with the Program, which were not material in the past three fiscal years, consisted of
program, facility and professional fees recorded in selling, general and administrative expenses in the accompanying consolidated statements of
operations.
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