Avnet 2006 Annual Report Download - page 41

The following table summarizes the Company's capital structure as of the end of fiscal 2006 with a
comparison with the end of fiscal 2005:
July 1, % of Total July 2, % of Total
2006 Capitalization 2005 Capitalization
(Dollars in thousands)
Short-term debtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 316,016 7.8% $ 61,298 1.8%
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 918,810 22.6 1,183,195 35.4
Total debtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,234,826 30.4 1,244,493 37.2
Shareholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,831,183 69.6 2,097,033 62.8
Total capitalization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $4,066,009 100.0 $3,341,526 100.0
Long-term debt in the above table includes a fair value adjustment decreasing total debt and
capitalization by $7.5 million in fiscal 2006 and increasing total debt and capitalization by $0.9 million at
July 2, 2005. The fair value adjustment relates to the interest rate hedges on the Company's 9
3
/ 4 % Notes in
fiscal 2006 and relates to both the 9
3
/ 4 % Notes and 8.00% Notes in fiscal 2005 as discussed in Financing
Transactions. The capitalization as of July 1, 2006 also reflects the impact of approximately 24.0 million
shares of Avnet common stock issued to the former owners of Memec as part of the acquisition of Memec.
The impact on the Company's consolidated shareholders' equity related to this issuance is $418.2 million (see
Note 2 to the accompanying consolidated financial statements for further discussion).
Financing Transactions
As of July 2, 2005, the Company had an unsecured $350.0 million credit facility with a syndicate of banks
(the ""Credit Facility''), expiring in June 2007. During the second quarter of fiscal 2006, the Company
amended and restated the Credit Facility to, among other things, increase the borrowing capacity from
$350.0 million to $500.0 million, and increase the maximum amount of the total facility that can be used for
letters of credit from $75.0 million to $100.0 million (the ""Amended Credit Facility''). In addition, the
Amended Credit Facility has a five-year term that matures in October 2010. The Company may still select
from various interest rate options, currencies and maturities under the Amended Credit Facility. The
Amended Credit Facility contains certain covenants, all of which the Company was in compliance with as of
July 1, 2006. At July 1, 2006, there was $6.0 million drawn and $22.9 million in letters of credit issued under
the Amended Credit Facility. There were no borrowings under the Credit Facility at July 2, 2005.
In August 2005, the Company also amended its accounts receivable securitization program (the
""Securitization Program'') to, among other things, increase the maximum available for borrowing from
$350.0 million to $450.0 million. In addition, the amended Securitization Program now provides that drawings
under the facility no longer qualify as off-balance sheet financing (see Off-Balance Sheet Arrangements
below). As a result, the receivables and related debt obligation will remain on the Company's consolidated
balance sheet when amounts are drawn under the Securitization Program. The amended Securitization
Program has a one year term expiring in August 2006 and has been renewed on substantially similar terms for
another year. At July 1, 2006, there were $40.0 million in drawings outstanding under the Program.
Also in August 2005, the Company issued $250.0 million of 6% Notes due September 1, 2015. The
proceeds from the offering, net of discount and underwriting fees, were $246.5 million. The Company used
these proceeds, plus cash and cash equivalents on hand, to fund the tender and repurchase of $250.0 million of
the 8% Notes due November 15, 2006, at a price of $1,045 per $1,000 principal amount of Notes. In addition,
the Company repurchased $4.1 million of the 8% Notes at a premium of approximately $1,038 per $1,000
principal amount of Notes in September 2005 and repurchased an additional $2.2 million of the 8% Notes at a
premium of approximately $1,026 per $1,000 principal amount of Notes in December 2005. The repurchase of
the 8% Notes and the termination of the interest rate swaps noted below resulted in debt extinguishment costs
of $11.7 million pre-tax, $7.1 million after tax and $0.05 per share on a diluted basis, relating primarily to
premiums and other transaction costs.
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