Avnet 2006 Annual Report Download - page 19

Item 3. Legal Proceedings
As a result primarily of certain former manufacturing operations, Avnet may have liability under various
federal, state and local environmental laws and regulations, including those governing pollution and exposure
to and the handling, storage and disposal of, hazardous substances. For example, under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (""CERCLA'') and similar
state laws, Avnet may be liable for the costs of cleaning up environmental contamination on or from its current
or former properties, and at off-site locations where the Company disposed of wastes in the past. Such laws
may impose joint and several liability. Typically, however, the costs for cleanup at such sites are allocated
among potentially responsible parties (""PRPs'') based upon each party's relative contribution to the
contamination, and other factors.
In May 1993, the Company and the former owners of a Company-owned site in Oxford, North Carolina
entered into a Settlement Agreement in which the former owners agreed to bear 100% of all costs associated
with investigation and cleanup of soils and sludges remaining on the site and 70% of all costs associated with
investigation and cleanup of groundwater. The Company agreed to be responsible for 30% of the groundwater
investigation and cleanup costs. In October 1993, the Company and the former owners entered into a Consent
Decree and Court Order with the Environmental Protection Agency (the ""EPA'') for the environmental clean
up of the site, the cost of which, according to the EPA's remedial investigation and feasibility study, was
estimated to be approximately $6.3 million, exclusive of the approximately $1.5 million in EPA past costs paid
by the PRPs. Based on current information, the Company does not anticipate its liability in the matter will be
material to its financial position, cash flow or results of operations.
The Company is a PRP at a manufacturing site in Huguenot, New York, currently under investigation by
the New York State Department of Environmental Conservation (""NYSDEC''), which site the Company
owned from the mid-1960s until the early 1970s. The Company has reached a settlement in litigation to
apportion the estimated clean-up costs among it and the current and former owners and operators of the site.
Pursuant to the settlement, the Company has paid a portion of past costs incurred by NYSDEC and the
current owner of the site, and will also pay a percentage of the cost of the environmental clean up of the site
(the first phase of which has been estimated to cost a total of $2.4 million for all parties to remediate
contaminated soils). The remediation plan is still subject to final approval by NYSDEC. Based on the
settlement arrangement and the expected costs of the remediation efforts, the Company does not anticipate its
liability in the matter will be material to its financial position, cash flow or results of operations.
Based on the information known to date, management believes that the Company has appropriately
accrued in its consolidated financial statements for its share of the costs associated with these environmental
clean up sites.
The Company and/or its subsidiaries are also parties to various other legal proceedings arising from time
to time in the normal course of business. While litigation is subject to inherent uncertainties, management
currently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not
have a material adverse effect on the Company's financial position, cash flow or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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