Avnet 2002 Annual Report Download - page 40

Therefore, the market value adjustments for the hedged 8% Notes and for the hedges directly oÅset one
another in interest expense.
In October 2001, the Company entered into agreements providing $1.0 billion in Ñnancing with a
syndicate of banks led by Bank of America in order to replace the then existing $1.25 billion 364-day credit
facility and the $700 million Ñve-year credit facility. This new bank Ñnancing is divided into three separate
credit facilities: a multi-year facility, a 364-day facility and a term loan facility. The multi-year facility is a
three-year revolving, multi-currency facility that matures on October 25, 2004 and provides up to $428.75 mil-
lion in Ñnancing. The 364-day facility is a revolving, multi-currency facility that matures on October 23, 2002
and provides up to $488.75 million in Ñnancing. The term loan facility, which matured on November 16, 2001,
was a U.S. dollar facility that provided up to $82.5 million in Ñnancing. The Company may select from various
interest rate options and maturities under these facilities, although the Company intends to use a signiÑcant
amount as a back-up for its commercial paper program pursuant to which the Company is authorized to issue
short-term notes for current operational business requirements.
In October 2001, Avnet Financial Services CVA, a wholly owned subsidiary incorporated in Belgium,
entered into an agreement with a Belgian bank which provides for the issuance of up to Euro 100 million in
Treasury Notes. The Treasury Note program is a multi-currency program pursuant to which short-term notes
may be issued with maturities from seven days to one year with either Ñxed or Öoating rates of interest. This
program is intended to partially Ñnance the working capital requirements of the Company's European
operations.
In June 2001, the Company entered into a Ñve-year $350 million accounts receivable securitization
program with a Ñnancial institution whereby it sells, on a revolving basis, an undivided interest in a pool of its
trade accounts receivable. Under the program, the Company sells receivables in securitization transactions and
retains a subordinated interest and servicing rights to those receivables. The availability for Ñnancing under the
securitization program is dependent on the level of the Company's trade receivables from month to month. At
June 28, 2002 and June 29, 2001, the Company had sold $200 million and $350 million, respectively, of
receivables under the program, which is reÖected as a reduction of receivables in the accompanying
consolidated balance sheets. The cash received from the sale of receivables was used primarily to pay down
outstanding borrowings. Accordingly, the amount of debt reÖected on the accompanying consolidated balance
sheets has been reduced by the $200 million and $350 million, respectively, at June 28, 2002 and June 29,
2001. The purpose of this program is to provide the Company with an additional source of liquidity at interest
rates more favorable than it could receive through other forms of Ñnancing. The program agreement was
amended in February 2002 to include participation by a second Ñnancial institution.
In October 2000, the Company issued $250.0 million of 8.20% Notes due October 17, 2003 (the
""8.20% Notes'') and issued $325.0 million 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
$572.4 million after deduction of underwriting discounts and other expenses associated with the sale. The
Floating Rate Notes were repaid upon their maturity in October 2001. The Floating Rate Notes bore interest
at an annual rate equal to three-month LIBOR, reset quarterly, plus 87.5 basis points (0.875%). 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 certain European operations of the VEBA Group as described in the ""Acquisitions'' section
above.
In October 2000, the Company entered into a $1.25 billion 364-day credit facility with a syndicate of
banks. This facility provided additional working capital capacity. The Company was able to select from various
interest rate options and maturities under this facility, although the Company utilized the facility primarily as
back-up for its commercial paper program. This facility expired upon maturity and was replaced by the
$1.0 billion of credit facilities described above.
In addition to its primary Ñnancing arrangements, the Company has several small lines of credit in
various locations to fund the short-term working capital, foreign exchange, overdraft and letter of credit needs
of its wholly owned subsidiaries in Europe and Asia. These facilities are generally guaranteed by Avnet. The
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