UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported)
|
October 25, 2007 | |
| AVNET, INC. | ||
| (Exact Name of Registrant as Specified in Its Charter) | ||
| New York | ||
| (State or Other Jurisdiction of Incorporation) |
1-4224 |
11-1890605 |
(Commission File Number)
|
(IRS Employer Identification No.) |
| 2211 South 47th Street, Phoenix, Arizona | 85034 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
| (480) 643-2000 | ||
| (Registrant’s Telephone Number, Including Area Code) | ||
| Not Applicable | ||
| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On October 25, 2007, Avnet, Inc. issued a press release announcing its first quarter results for
fiscal 2008. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Current Report on Form 8-K and the Exhibit attached hereto is being
furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it
be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange
Act, except as shall be expressly set forth in such filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits | ||||
| 99.1 | Press Release of Avnet, Inc. dated October 25, 2007 |
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AVNET, INC. (Registrant) |
||||
| Date: October 25, 2007 | By: | /s/ Raymond Sadowski | ||
| Raymond Sadowski Senior Vice President and Chief Financial Officer |
||||
 |
||
| Avnet, Inc. | ||
| 2211 South 47th Street | ||
| Phoenix, AZ 85034 |
PRESS RELEASE
Avnet, Inc. Reports First Quarter Fiscal Year 2008 Results
Record First Quarter Sales and EPS
Phoenix, October 25, 2007 - Avnet, Inc. (NYSE:AVT) today reported revenue of $4.10 billion for
first quarter fiscal 2008, ended September 29, 2007, representing an increase of 12.3% over
first quarter fiscal 2007. Net income for first quarter fiscal 2008 was $105.5 million, or $0.69
per share on a diluted basis, as compared with net income of $64.1 million, or $0.44 per share
on a diluted basis, for the first quarter last year. Excluding debt extinguishment costs that
negatively impacted the prior year quarter, net income and diluted earnings per share increased
31% and 25%, respectively, over the year-ago period. Included in these results is stock
compensation expense of $0.05 per diluted share in the current year first quarter as compared
with $0.03 per share in the same period last year.
Operating income for first quarter fiscal 2008 was $165.2 million, up 14.0% as compared with
operating income of $145.0 million in the year ago quarter. Operating income as a percent of
sales was 4.0%, up 6 basis points from last year’s first quarter, with both operating groups
contributing to the improvement. This represents the eighth consecutive quarter of year-over-year operating income margin expansion, excluding certain charges in prior periods.
Roy Vallee, Chairman and Chief Executive Officer, commented, “Once again, our highly
diversified revenue base contributed to our solid performance as better than expected growth
from the Asia region offset weaker sales in the Americas. While year-over-year organic revenue
growth slowed to 2.3% this quarter, positive contributions from acquisitions contributed to
continued year over year improvement in key quarterly financial metrics including operating
income, EPS and return on capital employed (ROCE). With another $700+ million of annual
revenue from acquisitions completed or announced in the current quarter, our acquisition
strategy continues to broaden our revenue base, create cross selling opportunities and add
further operating leverage to our business model going forward.”
Operating Group Results
Electronics Marketing (EM) sales of $2.49 billion in the first quarter fiscal 2008 were up 2.3%
year over year on a reported basis and essentially flat when adjusted to exclude the impact of
changes in foreign currency exchange rates. EM sales in the EMEA and Asia regions increased
4.6% and 9.5%, respectively, year over year, while the Americas decreased 4.8%. Excluding the
impact of changes in foreign currency exchange rates, year-over-year revenue at EM EMEA was
down 2.7%. EM operating income of $130.2 million for first quarter fiscal 2008 was up 3.6%
over the prior year first quarter operating income of $125.6 million and operating income
margin of 5.2% was up 7 basis points over the prior year quarter.
1
Mr. Vallee added, “EM’s results were a reflection of the seasonally slower September quarter,
but were better than our expectations as inventories throughout the supply chain continue to
decline. Even though sales in the lower margin Asia region increased to 30% of total EM as
compared with 28% in the year ago quarter, EM’s global operating
income margin improved year over year
for the eighth consecutive quarter. Our Asia team’s disciplined approach to profitable growth
with higher asset velocity translated 9.5% year over year top line growth into a 48 basis point improvement in
operating income margin and a 673 basis point improvement in return on working capital,
resulting in record quarterly sales and profits for the region.
Technology Solutions (TS) sales of $1.61 billion in the first quarter fiscal 2008 were up 32.5%
year over year on a reported basis and up 2.6% on a pro forma basis, as defined in the Non-GAAP
Financial Information section. On a pro forma basis, first quarter fiscal 2008 sales in Asia
and EMEA were up 31.6% and 20.1%, respectively, year over year while sales in the Americas were
down 5.1%. Excluding the impact of changes in foreign currency exchange rates, TS EMEA’s pro
forma year over year revenue growth was 11.0%. TS operating income was $58.5 million in the first quarter
fiscal 2008, a 50.1% increase as compared with first quarter fiscal 2007 operating income of
$39.0 million, and operating income margin of 3.6% increased by 42 basis points over the prior
year first quarter due to the change to net revenue accounting treatment of the sales of
supplier service contracts.
Mr. Vallee further added, “Technology Solutions performance in the first quarter of fiscal 2008
was further evidence of the leverage that we are achieving through value-creating acquisitions.
Year over year, TS operating income grew 1.5 times faster than revenue as both the Access and
Azure acquisitions contributed to operating margin expansion in our enterprise computer product
business. With the Magirus and Acal acquisitions in EMEA, TS will become the leading
pan-European value-add distributor with roughly $2.5 billion of projected annual revenue in the
region. These acquisitions will not only strengthen TS’ competitive position in new markets,
they will also further diversify our revenue base as TS will soon be generating close to 40% of
its revenue from outside the Americas as compared with 30% just a year ago.”
Cash Flow
During the first quarter of fiscal 2008, the Company used $34 million of free cash flow (as
defined later in this release), excluding cash used for acquisitions. As a result, the Company
ended the quarter with $521 million of cash and cash equivalents and net debt (total debt less
cash and cash equivalents) of $702 million. On a rolling four quarter basis, the Company
generated $749 million of free cash flow, excluding cash used for acquisitions.
Ray Sadowski, Chief Financial Officer, stated, “The continued improvement in our credit
statistics allowed us to negotiate a new five-year credit facility with a bank group that
includes 18 lenders. The facility not only contains better terms and conditions than the one
it supersedes, but also extends those terms an additional two years. With over $500 million in
cash on hand and $950 million of standby lines of credit, we are in a strong position to
continue pursuing growth opportunities that create additional shareholder value.”
Outlook
For
Avnet’s second quarter fiscal 2008, management expects normal
seasonality at both operating groups with sales at EM to be in the range of
$2.40 billion to $2.50 billion and anticipates sales for TS to be between $2.05 billion and
$2.15 billion. Therefore, Avnet’s consolidated sales are forecasted to be between $4.45 billion
and $4.65 billion for the second quarter of fiscal 2008. Management expects the
second quarter earnings to be in the range of $0.83 to $0.87 per share, up 24% — 30% as
compared with last year’s second quarter. The above EPS guidance
does not include the amortization of intangibles or integration
charges related to the acquisitions that have closed or will close in
the December quarter.
2
Forward Looking Statements
This press release contains certain “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements are based on management’s current expectations and are subject to uncertainty
and changes in factual circumstances. The forward-looking statements herein include statements
addressing future financial and operating results of Avnet and may include words such as
“will,” “anticipate,” “expect,” believe,” and “should,” and other words and terms of similar
meaning in connection with any discussions of future operating or financial performance or
business prospects. Actual results may vary materially from the expectations contained in the
forward-looking statements.
The following factors, among others, could cause actual results to differ materially from those
described in the forward-looking statements: the Company’s ability to retain and grow market
share and to generate additional cash flow, risks associated with any acquisition activities
and the successful integration of acquired companies, any significant and unanticipated sales
decline, changes in business conditions and the economy in general, changes in market demand
and pricing pressures, allocations of products by suppliers, other competitive and/or
regulatory factors affecting the businesses of Avnet generally.
More detailed information about these and other factors is set forth in Avnet’s filings with
the Securities and Exchange Commission, including the Company’s reports on Form 10-K, Form 10-Q
and Form 8-K. Avnet is under no obligation to update any forward-looking statements, whether
as a result of new information, future events or otherwise.
Non-GAAP Financial Information
In addition to disclosing financial results that are determined in accordance with generally
accepted accounting principles (“GAAP”), the Company also discloses in this press release
certain non-GAAP financial information including adjusted net income and adjusted diluted
earnings per share. The non-GAAP financial information is used to reflect the Company’s
results of operations excluding debt extinguishment costs in the prior period presented. The
Company also discloses sales adjusted for the impact of certain acquisitions and the change to
net revenue accounting treatment of sales of supplier service contracts (“pro forma sales” or
“organic revenue”). Management believes pro forma sales is another useful measure for
evaluating current period performance as compared with prior periods and understanding
underlying trends.
Management believes net income and diluted earnings per share adjusted for the impact of debt
extinguishment costs is useful to investors because it provides a measure of the Company’s net
profitability on a more comparable basis to historical periods and provides a more meaningful
basis for forecasting future performance. Additionally, because of management’s focus on
generating shareholder value, of which net profitability is a primary driver, management
believes net income and diluted EPS excluding the impact of this item provides an important
measure of the Company’s net results of operations for the investing public. However, analysis
of results and outlook on a non-GAAP basis should be used as a complement to, and in
conjunction with, data presented in accordance with GAAP.
3
First Quarter Fiscal 2007
The results for the first quarter of fiscal year 2007 include debt extinguishment costs, the
mention of which management believes is useful to investors when comparing operating
performance with other periods.
| Pre-tax | ||||||||||||
| Quarter ended September 30, 2006 | Income | Net Income | Diluted EPS | |||||||||
| (in thousands, except per share data) | ||||||||||||
GAAP results |
$ | 99,073 | $ | 64,143 | $ | 0.44 | ||||||
Debt extinguishment costs |
27,358 | 16,538 | 0.11 | |||||||||
Adjusted results |
$ | 126,431 | $ | 80,681 | $ | 0.55 | ||||||
Organic (Pro Forma) Sales
Organic
revenue, or pro forma sales, is defined as sales adjusted for (i) the impact of the
classification of sales of supplier service contracts on an agency (net) basis, which was
effective beginning in the third quarter of fiscal 2007, as if the
net revenue accounting was applied to periods prior to the change, and (ii) the impact of certain
acquisitions, including Access Distribution acquired on December 31, 2006, Azure Technologies
acquired in April 2007 and Flint Distribution acquired in
July 2007, to include the sales recorded by these businesses as
if the acquisition had occurred at the beginning of fiscal 2007. Prior period sales
adjusted for these impacts are presented below:
| Sales | Gross to | Acquisition | Pro forma | |||||||||||||
| as Reported | Net Impact | Sales | Sales | |||||||||||||
| (in thousands) | ||||||||||||||||
Q1 Fiscal 2007 |
$ | 3,648,400 | $ | (95,810 | ) | $ | 455,631 | $ | 4,008,221 | |||||||
Q2 Fiscal 2007 |
3,891,180 | (118,607 | ) | 524,168 | 4,296,741 | |||||||||||
Q3 Fiscal 2007 |
3,904,262 | — | 21,949 | 3,926,211 | ||||||||||||
Q4 Fiscal 2007 |
4,237,245 | — | 14,767 | 4,252,012 | ||||||||||||
Fiscal year 2007 |
$ | 15,681,087 | $ | (214,417 | ) | $ | 1,016,515 | $ | 16,483,185 | |||||||
Cash Flow Activity
The following table summarizes the Company’s cash flow activity for the first quarters of
fiscal 2008 and 2007, including the Company’s computation of free cash flow and a
reconciliation of this metric to the nearest GAAP measures of net income and net cash flow from
operations. Management’s computation of free cash flow consists of net cash flow from
operations plus cash flows generated from or used for purchases and sales of property, plant
and equipment, acquisitions of operations, effects of exchange rates on cash and cash
equivalents and other financing activities. Management believes that the non-GAAP metric of
free cash flow is a useful measure to help management and investors better assess and
understand the Company’s operating performance and sources and uses of cash. Management also
believes the analysis of free cash flow assists in identifying underlying trends in the
business. Computations of free cash flow may differ from company to company. Therefore, the
analysis of free cash flow should be used as a complement to, and in conjunction with, the
Company’s consolidated statements of cash flows presented in the accompanying financial
statements.
Management also analyzes cash flow from operations based upon its three primary components
noted in the table below: net income, non-cash and other reconciling items and cash flow used
for working capital. Similar to free cash flow, management believes that this breakout is an
important measure to help management and investors better understand the trends in the
Company’s cash flows, including the impact of management’s focus on asset
4
utilization and efficiency through its management of the net balance of receivables,
inventories and accounts payable.
| First Quarters Ended | ||||||||
| September 29, | September 30, | |||||||
| 2007 | 2006 | |||||||
| (in thousands) | ||||||||
Net income |
$ | 105,537 | $ | 64,143 | ||||
Non-cash and other reconciling items |
60,130 | 50,850 | ||||||
Cash flow used for working capital
(excluding cash and cash equivalents) |
(209,492 | ) | (141,610 | ) | ||||
Net cash flow used for operations |
(43,825 | ) | (26,617 | ) | ||||
Cash flow generated from (used for): |
||||||||
Purchases of property, plant and equipment |
(13,661 | ) | (14,045 | ) | ||||
Cash proceeds from sales of property, plant
and equipment |
278 | 728 | ||||||
Effect of exchange rates on cash and cash
equivalents |
18,624 | 88 | ||||||
Other, net financing activities |
4,777 | 3,082 | ||||||
| (33,807 | ) | (36,764 | ) | |||||
Acquisitions of operations, net |
(12,190 | ) | — | |||||
Net free cash flow |
$ | (45,997 | ) | $ | (36,764 | ) | ||
Teleconference Webcast and Upcoming Events
Avnet will host a Webcast of its quarterly teleconference today at 2:00 p.m. Eastern Time. The
live Webcast event, as well as other financial information including financial statement
reconciliations of GAAP and non-GAAP financial measures, will be available through
www.ir.avnet.com. Please log onto the site 15 minutes prior to the start of the event to
register or download any necessary software. An archive copy of the presentation will also be
available after the Webcast.
For a listing of Avnet’s upcoming events and other information, please visit Avnet’s investor
relations website at www.ir.avnet.com.
About Avnet
Avnet, Inc. (NYSE:AVT) is one of the largest distributors of electronic components, computer
products and technology services and solutions with more than 300 locations serving 70
countries worldwide. The company markets, distributes and optimizes the supply-chain and
provides design-chain services for the products of the world’s leading electronic component
suppliers, enterprise computer manufacturers and embedded subsystem providers. Avnet brings a
breadth and depth of capabilities, such as maximizing inventory efficiency, managing logistics,
assembling products and providing engineering design assistance for its 100,000 customers,
accelerating their growth through cost-effective, value-added services and solutions. For the
fiscal year ended June 30, 2007, Avnet generated revenue of $15.68 billion. For more
information, visit www.avnet.com. (AVT_IR)
Investor Relations Contact:
Avnet, Inc.
Vincent Keenan
Investor Relations
(480) 643-7053
investorrelations@avnet.com
Vincent Keenan
Investor Relations
(480) 643-7053
investorrelations@avnet.com
5
AVNET, INC.
FINANCIAL HIGHLIGHTS
(MILLIONS EXCEPT PER SHARE DATA)
FINANCIAL HIGHLIGHTS
(MILLIONS EXCEPT PER SHARE DATA)
| FIRST QUARTERS ENDED | ||||||||
| SEPTEMBER 29, | SEPTEMBER 30, | |||||||
| 2007 | 2006 * | |||||||
Sales |
$ | 4,098.7 | $ | 3,648.4 | ||||
Income before income taxes |
154.1 | 99.1 | ||||||
Net income |
105.5 | 64.1 | ||||||
Net income per share: |
||||||||
Basic |
$ | 0.70 | $ | 0.44 | ||||
Diluted |
$ | 0.69 | $ | 0.44 | ||||
| * | See Notes to Consolidated Statements of Operations on Page 11. |
6
AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PER SHARE DATA)
| FIRST QUARTERS ENDED | ||||||||
| SEPTEMBER 29, | SEPTEMBER 30, | |||||||
| 2007 | 2006 * | |||||||
Sales |
$ | 4,098,718 | $ | 3,648,400 | ||||
Cost of sales |
3,572,190 | 3,180,035 | ||||||
Gross profit |
526,528 | 468,365 | ||||||
Selling, general and administrative
expenses |
361,332 | 323,394 | ||||||
Operating income |
165,196 | 144,971 | ||||||
Other income, net |
7,430 | 3,746 | ||||||
Interest expense |
(18,557 | ) | (22,286 | ) | ||||
Debt extinguishment costs (Note 1*) |
— | (27,358 | ) | |||||
Income before income taxes |
154,069 | 99,073 | ||||||
Income tax provision |
48,532 | 34,930 | ||||||
Net income |
$ | 105,537 | $ | 64,143 | ||||
Net earnings per share: |
||||||||
Basic |
$ | 0.70 | $ | 0.44 | ||||
Diluted |
$ | 0.69 | $ | 0.44 | ||||
Shares used to compute earnings
per share: |
||||||||
Basic |
149,978 | 146,718 | ||||||
Diluted |
153,458 | 147,201 | ||||||
| * | See Notes to Consolidated Statements of Operations on Page 11. |
7
AVNET, INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
| SEPTEMBER 29, | JUNE 30, | |||||||
| 2007 | 2007 | |||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 520,886 | $ | 557,350 | ||||
Receivables, net |
3,065,792 | 3,103,015 | ||||||
Inventories |
1,824,060 | 1,736,301 | ||||||
Prepaid and other current assets |
71,767 | 92,179 | ||||||
Total current assets |
5,482,505 | 5,488,845 | ||||||
Property, plant and equipment, net |
184,489 | 179,533 | ||||||
Goodwill |
1,409,186 | 1,402,470 | ||||||
Other assets |
291,494 | 284,271 | ||||||
Total assets |
7,367,674 | 7,355,119 | ||||||
Less liabilities: |
||||||||
Current liabilities: |
||||||||
Borrowings due within one year |
66,659 | 53,367 | ||||||
Accounts payable |
2,035,709 | 2,228,017 | ||||||
Accrued expenses and other |
426,312 | 495,601 | ||||||
Total current liabilities |
2,528,680 | 2,776,985 | ||||||
Long-term debt, less due within one year |
1,156,008 | 1,155,990 | ||||||
Other long-term liabilities |
107,819 | 21,499 | ||||||
Total liabilities |
3,792,507 | 3,954,474 | ||||||
Shareholders’ equity |
$ | 3,575,167 | $ | 3,400,645 | ||||
8
AVNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
| FIRST QUARTERS ENDED | ||||||||
| SEPTEMBER 29, | SEPTEMBER 30, | |||||||
| 2007 | 2006 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 105,537 | $ | 64,143 | ||||
Non-cash and other reconciling items: |
||||||||
Depreciation and amortization |
13,522 | 13,260 | ||||||
Deferred income taxes |
32,343 | 22,121 | ||||||
Stock based compensation |
11,395 | 7,025 | ||||||
Other, net |
2,870 | 8,444 | ||||||
Changes in (net of effects from business acquisitions): |
||||||||
Receivables |
101,610 | (80,583 | ) | |||||
Inventories |
(49,219 | ) | (34,328 | ) | ||||
Accounts payable |
(229,186 | ) | (9,522 | ) | ||||
Accrued expenses and other, net |
(32,697 | ) | (17,177 | ) | ||||
Net cash flows used for operating activities |
(43,825 | ) | (26,617 | ) | ||||
Cash flows from financing activities: |
||||||||
Issuance of notes in public offerings, net of
issuance costs |
— | 296,085 | ||||||
Proceeds from (repayment of) bank debt, net |
9,433 | (54,258 | ) | |||||
Proceeds from other debt, net |
100 | 3 | ||||||
Other, net |
4,777 | 3,082 | ||||||
Net cash flows provided from financing activities |
14,310 | 244,912 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of property, plant, and equipment |
(13,661 | ) | (14,045 | ) | ||||
Cash proceeds from sales of property, plant and
equipment |
278 | 728 | ||||||
Acquisitions of operations, net |
(12,190 | ) | — | |||||
Net cash flows used for investing activities |
(25,573 | ) | (13,317 | ) | ||||
Effect of exchange rates on cash and cash equivalents |
18,624 | 88 | ||||||
Cash and cash equivalents: |
||||||||
- (decrease) increase |
(36,464 | ) | 205,066 | |||||
- at beginning of period |
557,350 | 276,713 | ||||||
- at end of period |
$ | 520,886 | $ | 481,779 | ||||
9
AVNET, INC.
SEGMENT INFORMATION
(MILLIONS)
SEGMENT INFORMATION
(MILLIONS)
| FIRST QUARTERS ENDED | ||||||||
| SEPTEMBER 29, | SEPTEMBER 30, | |||||||
| 2007 | 2006 | |||||||
| SALES: | ||||||||
Electronics Marketing |
$ | 2,491.2 | $ | 2,435.4 | ||||
Technology Solutions |
1,607.5 | 1,213.0 | ||||||
Consolidated |
$ | 4,098.7 | $ | 3,648.4 | ||||
OPERATING INCOME (LOSS): |
||||||||
Electronics Marketing |
$ | 130.2 | $ | 125.6 | ||||
Technology Solutions |
58.5 | 39.0 | ||||||
Corporate |
(23.5 | ) | (19.6 | ) | ||||
Consolidated |
$ | 165.2 | $ | 145.0 | ||||
10
AVNET, INC.
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
FIRST QUARTER OF FISCAL 2008
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
FIRST QUARTER OF FISCAL 2008
(1) During the first quarter of fiscal 2007, the Company incurred debt extinguishment costs
amounting to $27,358,000 pre-tax, $16,538,000 after tax and $0.11 per share on a diluted basis. In
September 2006, the Company elected to redeem on October 12, 2006 all of its outstanding 93/4% Notes
due February 15, 2008. The costs incurred as a result of the election notice included $20,322,000
for a make-whole redemption premium, $4,939,000 associated with the termination of two interest
rate swaps that hedged $200,000,000 of the 93/4% Notes, and $2,097,000 to write-off certain deferred
financing costs. The Company used the net proceeds from the issuance in the first quarter of
$300,000,000 principal amount of 6.625% Notes due September 15, 2016, plus available liquidity, to
repurchase the 93/4% Notes on October 12, 2006.
11