Avnet 2009 Annual Report Download - page 59

Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
to “Other assets” on the consolidating balance sheet. As discussed above, certain of these assets were impaired as of
December 27, 2008.
Intangible assets
During fiscal 2009, the Company also evaluated the recoverability of its long-lived assets at each of the
reporting units where goodwill was deemed to be impaired. Based upon this evaluation, which utilized level 3 criteria
under fair value measurement standards, the Company determined that certain of its amortizable intangible assets
were impaired. As a result, the Company recognized a non-cash intangible asset impairment charge of $31,393,000
pre- and after tax and $0.21 per share during the second quarter of fiscal 2009. In conjunction with the annual
goodwill impairment test, the Company again evaluated the recoverability of its long-lived assets during the fourth
quarter of fiscal 2009 and determined that no impairment had occurred.
During the fourth quarter of fiscal 2009, the Company completed its final valuation of an intangible asset
acquired which resulted in an adjustment to reduce intangible assets by $11,156,000 and the estimated useful life
from ten years to seven years. The adjustment to decrease intangible assets was offset by a corresponding increase in
goodwill which was deemed to be impaired as of the end of the fourth quarter of fiscal 2009. As of June 27, 2009,
“Other assets” included customer relationships intangible assets with a carrying value of $56,109,000; consisting of
$78,248,000 in original cost value and accumulated amortization and foreign currency translation of $22,139,000.
These assets are being amortized over a weighted average life of nine years. Amortization expense was $12,272,000,
$6,767,000 and $5,800,000 in fiscal 2009, 2008 and 2007, respectively. Amortization expense for the next five years
is expected to be approximately $9,000,000 each year, based upon current foreign currency exchange rates.
Short-term debt consists of the following:
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 1.8% and 1.5% at the end of fiscal 2009 and 2008, respectively.
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
qualify for sale treatment and, as a result, any borrowings under the Program are recorded as debt on the consolidated
balance sheet. The Program contains certain covenants, all of which the Company was in compliance with as of
June 27, 2009. The Program has a one year term that expires in August 2009, which has been renewed for another
year on comparable terms, except for an increase in facility and borrowing costs to reflect current market conditions;
however, the increase will not have a material impact on the Company’s consolidated financial statements. There
were no amounts outstanding under the Program at June 27, 2009 or June 28, 2008.
56
7.
External financing
June 27,
June 28,
2009 2008
(Thousands)
Bank credit facilities
$
20,882
$
32,649
Other debt due within one year
2,412
11,155
Short
-
term debt
$
23,294
$
43,804