Avnet 2012 Annual Report Download - page 32

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Table of Contents
During fiscal 2012, the Company amended its accounts receivable securitization program (the "Securitization Program" or “Program”
)
with a group of financial institutions to allow the Company to sell, on a revolving basis, an undivided interest of up to $750.0 million
($600.0 million prior to the amendment) 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 30, 2012. The Program has a one
year term that expires at the end of August 2012, which is expected to be renewed for another year on comparable terms. There were $670.0
million in borrowings outstanding under the Program at June 30, 2012 and $160.0 million outstanding at July 2, 2011.
Notes outstanding at June 30, 2012 consisted of:
In addition to its primary financing arrangements, the Company has several small lines of credit in various locations to fund the short-
term
working capital, foreign exchange, overdraft and letter of credit needs of its wholly owned subsidiaries in Europe, Asia and Canada. Avnet
generally guarantees its subsidiaries' obligations under these facilities.
Covenants and Conditions
The Securitization Program discussed previously requires the Company to maintain certain minimum interest coverage and leverage ratios
in order to continue utilizing the Program. The Program also contains certain covenants relating to the quality of the receivables sold. If these
conditions are not met, the Company may not be able to borrow any additional funds and the financial institutions may consider this an
amortization event, as defined in the agreement, which would permit the financial institutions to liquidate the accounts receivables sold to cover
any outstanding borrowings. Circumstances that could affect the Company’
s ability to meet the required covenants and conditions of the
Program include the Company’
s ongoing profitability and various other economic, market and industry factors. Management does not believe
that the covenants under the Program limit the Company’
s ability to pursue its intended business strategy or its future financing needs. The
Company was in compliance with all covenants of the Program as of June 30, 2012.
The 2012 Credit Facility, discussed in Financing Transactions,
contains certain covenants with various limitations on debt incurrence,
dividends, investments and capital expenditures and also includes financial covenants requiring the Company to maintain minimum interest
coverage and leverage ratios. Management does not believe that the covenants in the Credit Facility limit the Company’
s ability to pursue its
intended business strategy or its future financing needs. The Company was in compliance with all covenants of the Credit Facility as of June 30,
2012.
See Liquidity below for further discussion of the Company’s availability under these various facilities.
Liquidity
As mentioned previously, the Company amended its accounts receivable securitization program in August 2011 to increase the borrowing
capacity from $600.0 million to $750.0 million. Also during fiscal 2012, the Company entered into a five-
year $1.0 billion senior unsecured
revolving credit facility and terminated its existing $500 million facility. As of June 30, 2012, the Company had total borrowing capacity of
$1.75 billion under the 2012 Credit Facility and the Securitization Program. There were $110.1 million in borrowings outstanding and
$17.2 million in letters of credit issued under the 2012 Credit Facility and $670.0 million outstanding under the Securitization Program resulting
in $952.7 million of net availability at the end of fiscal 2012. During fiscal 2012, the Company had an average daily balance outstanding under
the 2012 Credit Facility of approximately $115 million and $620 million under the Securitization Program. During fiscal 2011, the Company had
an average daily balance outstanding under the 2008 Credit Facility of approximately $140 million and $405 million under the Securitization
Program.
31
• $
300.0 million of 5.875% Notes due March 15, 2014
• $
250.0 million of 6.00% Notes due September 1, 2015
• $
300.0 million of 6.625% Notes due September 15, 2016
• $
300.0 million of 5.875% Notes due June 15, 2020