Avnet 2007 Annual Report Download - page 57

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however, the Company expects any further adjustments to be completed within the purchase price allocation period,
which is generally within one year of the acquisition date (December 29, 2007 in the case of Access).
During the fourth quarter of fiscal 2007, the Company completed its valuation of the identifiable intangible
assets that resulted from the Access acquisition. The Company allocated $32,800,000 of purchase price to customer
relationship intangible assets which management estimates to have a life of ten years (see Note 6).
Substantially all of the goodwill generated by the Access acquisition is expected to be deductible for tax
purposes, although the Company has not yet quantified the deductible portion.
December 31, 2006
(Thousands)
Current assets . . ................................................. $650,435
Property, plant and equipment ....................................... 5,209
Goodwill ....................................................... 92,804
Amortizable intangible asset ......................................... 32,800
Other assets ..................................................... 438
Total assets acquired............................................. 781,686
Current liabilities ................................................. 344,132
Net assets acquired (gross purchase price) ............................. $437,554
Less: cash acquired ............................................... (9,861)
Purchase price, net of cash acquired ................................. $427,693
The integration of Access into the Americas and EMEA regions of the Technology Solutions operations was
complete as of the end of fiscal 2007. The Access acquisition provides a portfolio of technology products that
management believes is complementary to Avnet’s existing offerings. Management estimates it has achieved its
targeted annualized operating expense synergies as of the completion of the integration and believes the acquisition
will contribute to the attainment of the Company’s financial goals. The combination of these factors is the rationale
for the excess of purchase price paid over the value of assets and liabilities acquired.
Preliminary Access acquisition-related exit activity accounted for in purchase accounting
As a result of the acquisition of Access, the Company established and approved plans to integrate the acquired
operations into the Americas and EMEA regions of the Company’s TS operations, for which the Company recorded
$5.0 million in preliminary exit-related purchase accounting adjustments during fiscal 2007. These exit-related
liabilities consisted of severance for workforce reductions, non-cancelable lease commitments and lease termi-
nation charges for leased facilities, and other contract termination costs associated with the exit activities.
The following table summarizes the exit-related acquisition reserves that have been preliminarily established
through purchase accounting and related activity that occurred during fiscal 2007:
Severance
Reserves
Facility Exit
Reserves Other Total
(Thousands)
Purchase accounting adjustments .................. $3,020 $1,826 $147 $4,993
Amounts utilized ............................ (603) (27) (38) (668)
Other, principally foreign currency translation . . ..... 6 10 3 19
Balance at June 30, 2007 ........................ $2,423 $1,809 $112 $4,344
57
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)