Avnet 2004 Annual Report Download - page 54

AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
acquisition. This resolution resulted in a refund to Avnet, totaling approximately $6,486,000, of a portion of
the amount paid by Avnet at the closing of the acquisition. The refunded purchase price was recorded as a
reduction of operating expenses in the Ñscal 2003 consolidated statement of operations as the goodwill related
to the VEBA Electronics Group had been written oÅ as a result of the transition impairment test performed
upon the adoption of SFAS 142 (see Note 6).
In Ñscal 2002, the Company completed the acquisition of Gamma Optronik AB, as well as certain
contingent purchase price payments associated with businesses acquired in prior Ñscal years (principally,
Sunrise Technology Ltd., RDT Technologies Ltd., PCD Italia S.r.l. and Matica S.p.A. and Savoir Technology
Group, Inc.), the acquisition of the remaining 20% interest in Kopp Electronics Limited and further
investment in an unconsolidated business. These transactions required a total investment of $34,091,000 (net
of $1,462,000 of cash on the books of Gamma Optronik AB at its acquisition date), all of which was paid in
cash. Gamma Optronik AB had sales totaling approximately $7,534,000 during its Ñscal year immediately
preceding its acquisition. The historical results of operations of the acquired company would not have had a
material eÅect on the Company's consolidated results of operations and therefore no unaudited pro forma
results are presented herein.
3. Accounts Receivable Securitization:
The Company has an accounts receivable securitization program (the ""Program'') with two Ñnancial
institutions that allows the Company to sell, on a revolving basis, an undivided interest of up to $350,000,000
in eligible U.S. receivables while retaining a subordinated interest in a portion of the receivables. The eligible
receivables are sold without legal recourse to third party conduits through a wholly owned bankruptcy-remote
special purpose entity that is consolidated for Ñnancial reporting purposes. The Company continues servicing
the sold receivables and charges the third party conduits a monthly servicing fee at market rates; accordingly,
no servicing asset or liability has been recorded.
The Program qualiÑes for sale treatment under SFAS 140. As of July 3, 2004 and June 27, 2003, the
Company had no drawings outstanding under the Program and therefore there are no securitized accounts
receivable held by the third party conduits. Cash outÖows for reduced drawings under the Program in the
consolidated statements of cash Öows for Ñscal 2003 and 2002 reÖect the impact of a lower amount of accounts
receivable being sold, on a revolving basis, into the third party conduits during those Ñscal years.
Expenses associated with the Program are as follows:
Years Ended
July 3, June 27, June 28,
2004 2003 2002
(Thousands)
Losses on sales of receivables and discount on retained interest, net
of servicing revenues ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 52 $1,244 $ 8,511
Program, facility and professional feesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,358 1,864 1,619
TotalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $2,410 $3,108 $10,130
Losses on sales of receivables and discount on retained interest, net of related servicing revenues, are
recorded in interest expense while the other costs associated with the Program are recorded in selling, general
and administrative expenses in the accompanying consolidated statements of operations. To the extent there
have been drawings under the Program, the Company has historically measured the fair value of its retained
interests at the time of a securitization using a present value model incorporating two key assumptions: (1) a
weighted average life of trade accounts receivable of 45 days and (2) a discount rate of 6.75% per annum.
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