Avnet 2007 Annual Report Download - page 61

6. Goodwill and intangible assets
The following table presents the carrying amount of goodwill, by reportable segment, for the periods
presented:
Electronics
Marketing
Technology
Solutions Total
Carrying value at July 1, 2006 ...................... $1,037,469 $259,128 $1,296,597
Additions ...................................... 7,286 101,382 108,668
Adjustments .................................... (5,898) — (5,898)
Foreign currency translations ....................... 352 2,751 3,103
Carrying value at June 30, 2007 ..................... $1,039,209 $363,261 $1,402,470
The goodwill activity for EM consisted of additions related to the acquisition of a small distribution business in
Italy (see Note 2). Adjustments to EM goodwill included the release of certain valuation allowances established
through purchase accounting against acquired deferred tax assets which were subsequently realized (see Note 9). In
addition, adjustments were made for exit-related reserves associated with acquisitions which were initially recorded
through purchase accounting. These reserves were subsequently deemed excessive and reversed through goodwill.
The addition of goodwill for TS is primarily the result of the Access acquisition and Azure (see Note 2).
As of June 30, 2007, the Company had customer relationship intangible assets associated with the Memec and
Access acquisitions (see Note 2), which are being amortized over ten years. Intangible asset amortization expense
during fiscal year 2007 and 2006 was $5,800,000 and $4,160,000, respectively, which included amortization
expense for a tradename acquired with Memec which is fully amortized as of the end of fiscal 2007 and six months
of amortization expense for the Access customer relationship intangible asset that was acquired at the beginning of
the third quarter of fiscal 2007. Amortization expense for the next five years is expected to be $5,540,000 each year.
7. External financing
Short-term debt consists of the following:
June 30,
2007
July 1,
2006
(Thousands)
8.00% Notes due November 15, 2006 .............................. $ — $143,675
Bank credit facilities ........................................... 51,534 130,725
Accounts receivable securitization ................................. — 40,000
Other debt due within one year . .................................. 1,833 1,616
Short-term debt ............................................. $53,367 $316,016
During the second quarter of fiscal 2007, the Company repaid the remaining $143,675,000 of the 8.00% Notes
that matured on November 15, 2006.
Bank credit facilities consist of various committed and uncommitted lines of credit with financial institutions
utilized primarily to support the working capital requirements of foreign operations. The weighted average interest
rate on the bank credit facilities was 1.5% at June 30, 2007 and 4.1% at July 1, 2006. Although interest rates
generally rose during fiscal 2007, the weighted average rate at June 30, 2007 is lower than at July 1, 2006 primarily
due to the Japanese bank credit facilities for which the interest rates averaged 1.5%.
The Company has an accounts receivable securitization program (the “Program”) with a group of financial
institutions that allows the Company to sell, on a revolving basis, an undivided interest of up to $450,000,000 in
eligible receivables while retaining a subordinated interest in a portion of the receivables. The Program does not
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)