Avnet 2003 Annual Report Download - page 42
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Please find page 42 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.The Company's quick assets at June 27, 2003 totaled $1.87 billion as compared with $1.53 billion at
June 28, 2002. At June 27, 2003, quick assets were greater than the Company's current liabilities by
$561.2 million as compared to $256.4 million at June 28, 2002. This increase in quick assets is due in part to
the increase in cash and cash equivalents resulting from the Company's positive cash Öows and Ñnancing
transactions completed during 2003 (see ""Cash Flow'' and ""Financing Transactions'' above) as well as the
increase in receivables in the June 28, 2003 consolidated balance sheet which resulted in part from the
reduced drawings under the Company's accounts receivable securitization program during 2003. Working
capital at June 27, 2003 was $1.82 billion as compared with $1.93 billion at June 28, 2002. This decrease is
primarily a result of the previously discussed inventory reductions since 2002, oÅset in part by the increase in
quick assets. At June 28, 2003, to support each dollar of current liabilities, the Company had $1.43 of quick
assets and $0.96 of other current assets for a total of $2.39 as compared with $2.51 at June 28, 2002.
The Company does not currently have any material commitments for capital expenditures.
Long-Term Contractual Obligations
The Company has the following contractual obligations outstanding as of June 27, 2003 (in millions):
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 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,429.9 $187.7 $360.6 $876.1 $ 5.5
Operating leases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 186.0 51.8 69.5 35.4 29.3
$1,615.9 $239.5 $430.1 $911.5 $34.8
At June 27, 2003, the Company has two interest rate swaps outstanding on one of its Ñxed rate debt
instruments which have yielded, in accordance with SFAS 133, as amended, a fair value adjustment of
$36.2 million to the Company's long-term debt included in the consolidated balance sheet at June 27, 2003.
In connection with the Company's January 2000 acquisition of 84% of the stock of Eurotronics B.V.,
which went to market as SEI, the Company entered into a share purchase agreement with the sellers that
called for an additional payment of cash or common stock of the Company if the Company's share price does
not reach $45.25 per share by January 2004. This guarantee would result in an additional payment to the
sellers of approximately $77.0 million based on the Company's stock price as of June 27, 2003.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company seeks to reduce earnings and cash Öow volatility associated with changes in interest rates
and foreign currency exchange rates by entering into Ñnancial arrangements intended to provide a hedge
against a portion of the risks associated with such volatility. The Company continues to have exposure to such
risks to the extent they are not hedged.
The Company has used interest rate swaps that convert certain Ñxed rate debt to variable rate debt,
eÅectively hedging the change in fair value of the Ñxed rate debt resulting from Öuctuations in interest rates.
At June 27, 2003, the Company has two interest rate swaps outstanding under which the Company pays a
variable interest rate and receives a Ñxed interest rate. Subsequent to 2003, the Company entered into three
additional interest rate swaps on $300.0 million of the Company's 9
3
/
4
% Notes, in order to hedge the change in
fair value of this Ñxed rate debt resulting from Öuctuations in interest rates. The following table sets forth the
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