Avnet 2008 Annual Report Download - page 57

Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Total amounts utilized for exit-related activities during fiscal 2008 consisted of $3,534,000 in cash payments.
The Company also recognized an additional $808,000 in severance which was recorded within the one year purchase
price allocation period. As of June 28, 2008, the majority of the severance reserves have been utilized and
management expects the majority of the facility exit costs to be utilized by fiscal 2013.
The exit-related purchase accounting reserves established for severance related to the reduction of 99 Access
personnel in the Americas and EMEA regions, and consisted primarily of administrative, finance and certain
operational functions. These reductions were based on management’s assessment of redundant Access positions
compared with existing Avnet positions. The costs presented in the “Facility Exit Reserves” column of the preceding
table consisted 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
included early termination costs for contracts that had 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.
Combined results for Avnet and Access were adjusted for the following in order to create the unaudited pro
forma results in the table 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
54
Pro Forma Results
Fiscal 2007
Fiscal 2006
(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
• $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.