Avnet 2011 Annual Report Download - page 51

Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Fiscal year — The Company operates on a “52/53 week”
fiscal year, which ends on the Saturday closest to June 30th. Fiscal
2011 and 2009 contained 52 weeks while fiscal 2010 contained 53 weeks. Unless otherwise noted, all references to “fiscal 2011”
or
any other “year” shall mean the Company’s fiscal year.
Management estimates —
The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Adoption of accounting standard — The Financial Accounting Standards Board (“FASB”)
issued authoritative guidance which
requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately
account for the debt and equity (conversion option) components of the instrument. The standard requires the convertible debt to be
recognized at the present value of its cash flows discounted using the non-
convertible debt borrowing rate at the date of issuance. The
resulting debt discount from this present value calculation is to be recognized as the value of the equity component and recorded to
“additional paid in capital.” The discounted convertible debt is then required to be accreted up to its face value and recorded as non-
cash interest expense over the expected life of the convertible debt. In addition, deferred financing costs associated with the
convertible debt are required to be allocated between the debt and equity components based upon relative values. During the first
quarter of fiscal 2010, the Company adopted this standard, however, there was no impact to the fiscal 2010 consolidated financial
statements because the Company’s 2% Convertible Senior Debentures (the “Debentures”),
to which this standard applied, were
extinguished in March 2009. Due to the required retrospective application of this standard to prior periods, the Company adjusted the
prior period comparative consolidated financial statements, which are summarized in the following tables.
As a result of the adoption of this accounting standard, the Company recognized the cumulative effect of the change on certain
components of equity as of the beginning of the earliest fiscal year presented in the consolidated statements of shareholders’
equity as
presented in the following table:
46
June 28, 2008
As Reported
Adjustments
As Adjusted
(Thousands)
Additional paid in capital
(1)
$
1,122,852
$
43,190
$
1,166,042
Retained earnings
(2)
$
2,379,723
$
(35,940
)
$
2,343,783
(1)
Adjustment represents the value of the equity component of the Debentures, net of deferred taxes.
(2)
Adjustment represents the accretion of the debt discount, net of tax, over the expected life of the Debentures, which was five
years from the date of issuance, or March 2009, because this was the earliest date the holders had a right to exercise their put
option.
Fiscal Year Ended
Adjustments
-
increase (decrease)
June 27, 2009
(Thousands, except
per share data)
Selling, general and adminstrative expenses
(3)
$
(291
)
Interest expense
(4)
12,185
Income tax provision
(4,644
)
Net income
(7,250
)
Basic EPS
$
(0.05
)
Diluted EPS
$
(0.05
)
(3)
Adjustment represents a reduction to deferred financing cost amortization expense as a result of allocating a portion of such costs
to the equity component of the Debentures.
(4)
Adjustment represents incremental non
-
cash interest expense as a result of accreting the Debenture debt discount.