Avnet 2007 Annual Report Download - page 36

The following table summarizes the Company’s capital structure as of the end of fiscal 2007 with a comparison
with the end of fiscal 2006:
June 30,
2007
% of Total
Capitalization
July 1,
2006
% of Total
Capitalization
(Dollars in thousands)
Short-term debt .................... $ 53,367 1.1% $ 316,016 7.8%
Long-term debt .................... 1,155,990 25.1 918,810 22.6
Total debt . . .................... 1,209,357 26.2 1,234,826 30.4
Shareholders’ equity ................ 3,400,645 73.8 2,831,183 69.6
Total capitalization ................ $4,610,002 100.0 $4,066,009 100.0
At July 1, 2006, long-term debt in the above table includes a fair value adjustment decreasing total debt and
capitalization by $7.5 million in fiscal 2006. The fair value adjustment relates to the interest rate hedges on the
Company’s 93⁄4% Notes in fiscal 2006, which were subsequently terminated during fiscal 2007 as discussed in
Financing Transactions below.
Financing Transactions
The Company has an unsecured $500.0 million credit facility with a syndicate of banks (the “Credit Facility”),
expiring in October 2010. The Company may select from various interest rate options, currencies and maturities
under the Credit Facility. The Credit Facility contains certain covenants, all of which the Company was in
compliance with as of June 30, 2007. At June 30, 2007, there were no borrowings outstanding under the Credit
Facility and $21.2 million of letters of credit issued under the Credit Facility, which represents a utilization of the
Credit Facility capacity but are not recorded in the consolidated balance sheet as the letters of credit are not debt. As
of July 1, 2006, there was $6.0 million drawn under the Credit Facility included in “long-term debt” in the
consolidated financial statements and $22.9 million in letters of credit issued under the Credit Facility.
The Company has a Securitization Program with a group of financial institutions that allows the Company to
sell, on a revolving basis, an undivided interest of up to $450.0 million in eligible receivables while retaining a
subordinated interest in a portion of the receivables. The Securitization Program does not qualify for sale
accounting and has a one year term that expires in August 2007 which has been renewed on comparable terms
for another year. There were no borrowings outstanding under the Securitization Program at June 30, 2007.
In March 2007, the Company issued $300.0 million of 5.875% Notes due March 15, 2014 (the
“5.875% Notes”). The proceeds of $297.1 million from the offering, net of discount and underwriting fees, were
used to repay amounts outstanding under the Company’s Credit Facility and the Securitization Program. The
borrowings under the Credit Facility and the Securitization Program were used to fund the Access acquisition.
During October 2006, the Company redeemed all of its outstanding ($361.4 million) 93⁄4% Notes due
February 15, 2008 (the “93⁄4% Notes”). The Company used the net proceeds of $296.1 million from the issuance
in the first quarter of $300.0 million principal amount of 6.625% Notes due September 15, 2016 plus available
liquidity, to repurchase the 93⁄4% Notes. In connection with the repurchase, the Company terminated two interest
rate swaps with a total notional amount of $200.0 million that hedged a portion of the 93⁄4% Notes. Debt
extinguishment costs incurred during the first quarter of fiscal 2007 as a result of the redemption totaled
$27.4 million pre-tax, $16.5 million after tax, or $0.11 per share on a diluted basis, and consisted of $20.3 million
for a make-whole redemption premium, $5.0 million associated with the two interest rate swap terminations, and
$2.1 million to write-off certain deferred financing costs.
In June 2006, the Company repurchased $113.6 million of the $475.0 million 93⁄4% Notes and, in connection
with this repurchase, the Company terminated one of the interest rate swaps with a notional amount of
$100.0 million that hedged a portion of the $475.0 million 93⁄4% Notes. The termination of this swap and
repurchase of the related hedged debt resulted in debt extinguishment costs of $10.9 million pre-tax, $6.6 million
after tax or $0.04 per share on a diluted basis. As a result of the tender and total repurchases in fiscal 2006, as
previously described, and the termination of interest rate swaps noted above, the Company incurred total debt
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