Avnet 2003 Annual Report Download - page 36
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Please find page 36 of the 2003 Avnet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Interest Expense and Other Income (Expense)
Interest expense was $104.9 million in 2003 as compared with $124.6 million in 2002, representing a
15.8% decline year-over-year. This decrease is due primarily to the ongoing debt reductions and reduced
drawings under the accounts receivable securitization program (hereafter referred to as the ""Program'' Ì see
""Liquidity and Capital Resources Ì Financing Transactions'') during 2003. Consolidated debt balances at
June 27, 2003 were $1.47 billion as compared to $1.63 billion at June 28, 2002 ($1.83 billion including
drawings under the Program), representing a decrease of $159 million, or $359 million including the reduced
drawings under the Program. The reductions in debt are a result of the positive operating cash Öows and
reductions in working capital over the course of 2003. Through similar eÅorts in 2002 as well, the Company
has reduced its total outstanding debt by $1.85 billion, or approximately 56%, since December 2000.
Other income, net, was $26.2 million in 2003 as compared to $6.8 million in 2002. The increase in other
income, net, was primarily a result of favorable foreign currency translation impacts during 2003.
Also during 2003, the Company incurred $13.5 million of debt extinguishment costs associated with the
redemption of a portion of its 6.45% Notes due August 15, 2003 and its 8.20% Notes due October 17, 2003 as
is further discussed in ""Liquidity and Capital Resources.''
Interest expense was $124.6 million in 2002 as compared with $191.9 million in 2001, declining by 35.1%.
The decrease was due primarily to the reduction of debt and reduced drawings under the Program as a result
of cash generated by reductions in working capital and, to a lesser extent, as a result of lower interest rates on
the Company's variable rate debt. The Company reduced its total debt and its drawings under the Program by
approximately $740 million from June 2001 to June 2002 and $1.5 billion from the end of December 2000 to
June 2002.
Income Tax Provision (BeneÑt)
The Company's eÅective tax rate on its loss from continuing operations was a beneÑt of 41.9% in 2003 as
compared to a beneÑt of 30.1% in 2002. The mix of proÑts globally at varying statutory rates impacts the
Company's consolidated tax rate. The Company also beneÑted in 2003 from the favorable impact of certain
tax planning initiatives put in place over the course of the prior year.
Avnet's eÅective tax rate on its loss from continuing operations was a beneÑt of 30.1% in 2002 as
compared to a provision rate of 99.9% in 2001. The high rate in 2001 is primarily a result of certain non-
deductible costs incurred associated with the Kent acquisition as well as the non-deductibility of goodwill
amortization, which was ceased in accordance with SFAS 142 at the beginning of 2002 (see ""Change in
Accounting Principle Ì Goodwill'').
Net Income (Loss) from Continuing Operations
As a result of the factors described in the preceding sections of this MD&A, the consolidated loss from
continuing operations was $46.1 million ($0.39 per share on a diluted basis) in 2003 as compared to
$84.4 million ($0.71 per share on a diluted basis) in 2002. These results include the negative after tax impact
of restructuring and other charges (including the debt extinguishment costs in 2003) of $73.9 million ($0.62
per share on a diluted basis) and $62.1 million ($0.52 per share on a diluted basis) in 2003 and 2002,
respectively.
The Company recorded a net loss from continuing operations of $84.4 million in 2002, or $0.71 per share
on a diluted basis, as compared to net income from continuing operations of $0.1 million, or breakeven on a
per share basis, in 2001. These results included the after tax impact of restructuring and other charges totaling
$62.1 million ($0.52 per share on a diluted basis) in 2002 and $236.7 million ($1.99 per share on a diluted
basis) in 2001. The decline in proÑtability is a result of the conÖuence of the various factors discussed above in
this MD&A.
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