Avnet 2001 Annual Report Download - page 51

4949
Avnet, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
facility in October 2000 as described below. The Company also
had an additional credit facility with Bank of America which
provided a line of credit up to $100,000,000 which also expired
in October 2000.
In October 2000, the Company issued $250,000,000 of 8.20%
Notes due October 17, 2003 (the “8.20% Notes”) and $325,000,000
of Floating Rate Notes due October 17, 2001 (the “Floating Rate
Notes”). The proceeds from the sale of the 8.20% Notes and the
Floating Rate Notes were approximately $572,400,000 after
deduction of underwriting discounts and other expenses associated
with the sale. The Floating Rate Notes bear interest at an annual
rate equal to three-month LIBOR, reset quarterly, plus 87.5 basis
points (.875%). The initial rate on the Floating Rate Notes was
7.65% per annum and the rate at June 29, 2001 was 5.65% per
annum. After temporarily using the net proceeds from the 8.20%
Notes and the Floating Rate Notes to pay down commercial paper
and make investments in short-term securities, the net proceeds
were used to fund the acquisition of the VEBA Group.
In October 2000, the Company entered into a $1.25 billion 364-day
credit facility with a syndicate of banks led by Bank of America
and Chase Manhattan Bank in order to replace the $500,000,000
364-day syndicated bank credit facility described previously. This
facility partially financed the acquisition of the VEBA Group and
provided additional working capital capacity. The Company may
select from various interest rate options and maturities under this
facility, although the Company intends to utilize the facility prima-
rily as back-up for its commercial paper program pursuant to which
the Company is authorized to issue short-term notes for current
operational business requirements. The credit agreement contains
various covenants. As of June 29, 2001, the Company was in
compliance with the various covenants contained in the agreement.
The Company also has bank credit facilities in certain European
and Asian countries with various maturities and interest rates.
At June 29, 2001, the fair value of the 7 7/8% Notes due February
15, 2005, the 6 7/8% Notes due March 15, 2004, the 6.45% Notes
due August 15, 2003, the 8.20% Notes due October 17, 2003 and
the 4.5% Convertible Notes due 2004 were approximately
$359,928,000, $97,960,000, $198,360,000, $256,925,000 and
$205,530,000, respectively. Annual payments on external financing in
2002, 2003, 2004, 2005 and 2006 will be $1,302,129,000, $1,549,000,
$551,149,000, $360,803,000 and $556,000, respectively. The Kent
4.5% Convertible Notes due 2004 (the “Notes”) and amounts
outstanding under the long-term bank facility described above are
being classified as “Borrowings due within one year” because, subse-
quent to year-end, the holders of the Notes exercised their “put”
options by selling the Notes back to the Company and the Company
intends to refinance its long-term bank facility during 2002.
8. ACCRUED EXPENSES AND OTHER
June 29, June 30,
2001 2000
(In thousands)
Payroll, commissions and related $122,979 $115,730
Insurance 18,647 15,457
Income taxes 4,543 41,553
Dividends payable (Note 15) 8,840 6,626
Other 259,731 169,166
$414,740 $348,532
9. INCOME TAXES
The Company follows the liability method of accounting for
income taxes. Deferred income taxes are recorded for temporary
differences between the amount of income and expense reported
for financial reporting and tax purposes.
A reconciliation between the federal statutory tax rate and the
effective tax rate is as follows:
June 29, June 30, July 2,
Years Ended 2001 2000 1999
Federal statutory rate 35.0% 35.0% 35.0%
State and local income taxes,
net of federal benefit 8.9 5.0 7.5
Amortization and
disposition of goodwill 11.4 2.3 11.5
Non-deductible costs related
to the acquisition of Kent
(Note 17) 36.8 .—.—
Foreign tax rates 7.9 0.2 (0.6)
Other, net (0.1) 0.2 (0.2)
Effective tax rate 99.9% 42.7% 53.2%