Avnet 2007 Annual Report Download - page 58

Total amounts utilized for exit-related activities during fiscal 2007 consisted of $668,000 in cash payments. As
of June 30, 2007, management expects the majority of the severance and other contractual obligations reserves to be
utilized by the end of fiscal 2008 and expects the majority of the facility exit costs to be utilized by fiscal 2013.
The exit-related purchase accounting reserves established for severance relate to the reduction of 80 Access
personnel in the Americas and EMEA regions, and consisted primarily of administrative, finance and certain
operational functions. These reductions are based on management’s assessment of redundant Access positions
compared with existing Avnet positions. Severance reserves, particularly those estimated to date for the EMEA
region, may be adjusted during the purchase price allocation period because these costs are subject to local
regulations and approvals. The costs presented in the “Facility Exit Reserves” column of the preceding table consist
of estimated future payments for non-cancelable leases and early lease termination costs for two facilities, one in the
Americas and one in EMEA. The costs presented in the “Other” column of the preceding table include early
termination costs for contracts that have no future benefit to the on-going combined business.
Unaudited pro forma results
Unaudited pro forma financial information is presented below as if the acquisition of Access occurred at the
beginning of fiscal 2006. The pro forma information presented below does not purport to present what the actual
results would have been had the acquisition in fact occurred at the beginning of fiscal 2006, nor does the information
project results for any future period. Further, the pro forma results exclude any benefits that may result from the
acquisition due to synergies that were derived from the elimination of any duplicative costs.
Fiscal 2007 Fiscal 2006
Pro Forma Results
(Thousands, except per share data)
Pro forma sales ........................................ $16,603,628 $16,108,931
Pro forma operating income ............................... 714,890 501,292
Pro forma net income .................................... 406,881 232,917
Pro forma diluted earnings per share ......................... $ 2.72 $ 1.58
Combined results for Avnet and Access were adjusted for the following in order to create the unaudited pro
forma results in the table above:
• $2,598,000 pre-tax, $1,741,000 after tax and $0.01 per diluted share, and $6,163,000 pre-tax, $3,987,000
after tax and $0.03 per diluted share for fiscal 2007 and 2006, respectively, for amortization expense relating
to intangible assets written off upon acquisition.
• $10,429,000 pre-tax, $6,988,000 after tax and $0.05 per diluted share, and $20,858,000 pre-tax, $13,495,000
after tax and $0.09 per diluted share, for fiscal 2007 and 2006, respectively, for interest expense relating to
borrowings used to fund the acquisition. For the pro forma results presented above, the borrowings were
assumed to be outstanding for the entire periods presented above.
Fiscal 2006
Memec Acquisition
On July 5, 2005, the Company acquired Memec Group Holdings Limited (“Memec”), a global distributor that
marketed and sold a portfolio of semiconductor devices from industry-leading suppliers in addition to providing
customers with engineering expertise and design services. Memec was fully integrated into the Electronics
Marketing group of Avnet as of the end of fiscal 2006. The consideration for the Memec acquisition consisted of
stock and cash valued at approximately $506,882,000 including transaction costs, plus the assumption of
$239,960,000 of Memec’s net debt (debt less cash acquired). All but $27,343,000 of this acquired net debt was
repaid upon the closing of the acquisition. Under the terms of the purchase, Memec investors received
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)