Avnet 2005 Annual Report Download - page 60

AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
result of this process will affect the final determination of goodwill. A portion of the goodwill generated by the
Memec acquisition is expected to be deductible for tax purposes, although the Company has not yet quantified
the deductible portion.
During fiscal 2005, the Company incurred $2,465,000 of costs associated with the acquisition of Memec,
consisting primarily of legal and other costs associated with the due diligence efforts. These costs are
capitalized as part of other long-term assets in the accompanying consolidated balance sheet at July 2, 2005
and are reflected as part of cash flows for acquisitions of operations and investments in the accompanying
consolidated statement of cash flows for the year ended July 2, 2005.
Fiscal 2005
In August 2004, Avnet completed the acquisition of DNS Slovakia (""DNS''), a value-added distributor
of enterprise computing solutions. DNS, with annual sales of approximately $15,000,000, was integrated into
Avnet's Technology Solutions operations in Europe. The Company acquired DNS for cash consideration, net
of cash acquired, totaling $1,098,000.
Fiscal 2004
During fiscal 2004, the Company completed a contingent purchase price payment associated with its
January 2000 acquisition of 84% of the stock of Eurotronics B.V., which went to market as SEI. Pursuant to
the terms of the share purchase agreement, in fiscal 2004, Avnet paid $48,930,000 to former shareholders of
Eurotronics B.V. in final settlement of contingent consideration related to this acquisition. This payment
resulted in an addition to goodwill of $33,930,000 and a reduction of additional paid-in capital of $15,000,000,
based upon an initial estimate of the fair value of the stock guarantee incorporated into the purchase price
accounting at the time of the Eurotronics B.V. acquisition. During fiscal 2004, the Company also acquired the
interest of a 9% minority shareholder in the Company's majority-owned Brazilian subsidiary, Avnet do Brasil,
LTDA, as well as making contingent purchase price payments associated with certain companies acquired in
prior years. The acquisition of minority interests and contingent purchase price payments discussed above
required a total investment of $50,528,000, all of which was paid in cash.
Fiscal 2003
During fiscal 2003, the Company acquired the remaining 40% interest in Max India Ltd. as well as
minority interests in various Israeli subsidiaries. The Company also completed contingent purchase price
payments associated with companies acquired in previous years including Sunrise Technology Ltd. and Avnet
Italy. The acquisitions of these minority interests and the contingent purchase price payments required a total
investment of $9,210,000, all of which was paid in cash.
Also during fiscal 2003, the Company and the seller of the European operations of the VEBA Electronics
Group (acquired by the Company in fiscal 2001) resolved certain purchase price contingencies related to this
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 fiscal 2003 consolidated statement of operations as the goodwill related
to the VEBA Electronics Group had been written off as a result of the transition impairment test performed
upon the adoption of SFAS 142 in fiscal 2002.
3. Accounts receivable securitization
As of July 2, 2005, the Company had an accounts receivable securitization program (the ""Program'')
with two financial institutions that allowed 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
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