Avnet 2006 Annual Report Download - page 46

The following table sets forth the carrying value and fair value of the Company's debt and interest rate
swaps at July 1, 2006 and July 2, 2005 (dollars in millions):
Carrying Value at Fair Value at Carrying Value at Fair Value at
July 1, 2006 July 1, 2006 July 2, 2005 July 2, 2005
Liabilities:
Fixed rate debt(1) ÏÏÏÏÏÏÏÏÏÏÏ $ 1,065 $1,051 $ 1,183 $1,249
Average interest rate ÏÏÏÏÏÏÏÏÏ 6.4% 7.2%
Floating rate debt ÏÏÏÏÏÏÏÏÏÏÏÏ $ 177 $ 177 $ 60 $ 60
Average interest rate ÏÏÏÏÏÏÏÏÏ 5.6% 4.0%
Interest Rate Swaps:
Fixed to variable ÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 7 $ 7 $ 1 $ 1
Average pay rateÏÏÏÏÏÏÏÏÏÏÏÏÏ LIBOR ° 4.3% LIBOR ° 4.3%
Average receive rateÏÏÏÏÏÏÏÏÏÏ 9.8% 8.8%
(1) Represents fair value of all fixed rate debt including hedged portions of the 9
3
/ 4 % Notes.
Many of the Company's subsidiaries, from time to time, purchase and sell products in currencies other
than their functional currencies. This subjects the Company to the risks associated with the fluctuations of
foreign currency exchange rates. The Company reduces this risk by utilizing natural hedging (offsetting
receivables and payables) as well as by creating offsetting positions through the use of derivative financial
instruments, primarily forward foreign exchange contracts with maturities of less than sixty days. The
Company adjusts all foreign denominated balances and any outstanding foreign exchange contracts to fair
market value through the consolidated statements of operations. Therefore, the market risk related to foreign
exchange contracts is offset by changes in valuation of the underlying items being hedged. The asset or
liability representing the fair value of foreign exchange contracts is classified in the captions ""other current
assets'' or ""accrued expenses and other,'' as applicable, in the accompanying consolidated balance sheets. A
hypothetical 10% change in currency exchange rates under the contracts outstanding at July 1, 2006 would
result in an increase or decrease of approximately $8.5 million to the fair value of the forward foreign exchange
contracts, which would generally be offset by an opposite effect on the related hedged positions.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data are listed under Item 15 of this Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
The Company's management, including its Chief Executive Officer and Chief Financial Officer, have
evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the ""Exchange Act'')) as of the
end of the reporting period covered by this Annual Report on Form 10-K. Based on such evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this
Annual Report on Form 10-K, the Company's disclosure controls and procedures are effective such that
material information required to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time periods specified by the
Securities and Exchange Commission's rules and forms relating to the Company.
During the last quarter of fiscal 2006, there have been no changes to the Company's internal control over
financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over financial reporting.
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