Avnet 2003 Annual Report Download - page 41
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Please find page 41 of the 2003 Avnet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Covenants and Conditions
The Program contains certain covenants relating to the quality of the receivables sold under the Program
in addition to the minimum unsecured ratings triggers discussed in ""OÅ-Balance Sheet Arrangements'' above.
If these conditions are not met, the Company may not be able to borrow any additional funds under the
Program and the Ñnancial institutions generally have the right to accelerate any amounts outstanding.
Circumstances that could aÅect the Company's ability to meet the required covenants and conditions of the
Program include the duration and depth of the current economic downturn and the impact on proÑtability,
perceived Ñnancial strength or weakness by credit rating agencies and various other economic, market and
industry factors. The Company was in compliance with all covenants, including the minimum unsecured
credit ratings triggers, for the Program at June 27, 2003.
In the case of any default, the Company would either have to negotiate with the lenders to modify the
Program or pay oÅ all amounts outstanding, terminate the Program and, if necessary, seek alternative
Ñnancing. As of June 27, 2003, there were no drawings under the Program.
See ""Liquidity'' for further discussion of the Company's availability under these various facilities.
Liquidity
Under its current Ñnancing arrangements discussed in ""Financing Transactions'' above, the Company had
an aggregate of approximately $700.0 million in additional borrowing capacity at June 27, 2003 ($350.0 mil-
lion after the termination of the multi-year facility subsequent to 2003, as discussed in ""Financing
Transactions''). The Company also had an additional $395.5 million of cash and cash equivalents at June 27,
2003, although $78.5 million of that cash on hand was held in an escrow account that is restricted to repay the
remaining principal and interest obligations on the 6.45% and 8.20% Notes. Management believes its
borrowing capacity, before and after the termination of the multi-year facility, its current cash availability and
its ability to generate cash from normal operations are suÇcient to meet its projected working capital
requirements and debt obligations maturing in the upcoming year.
The following table highlights the Company's liquidity and related ratios for the past two years:
Comparative Analysis Ì Liquidity
Percentage
Years Ended Change
June 27, 2003(1) June 28, 2002(2) 2003 to 2002
(Dollars in millions)
Current Assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $3,126.1 $3,205.5 (2.5)%
Quick AssetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,867.3 1,533.2 21.8
Current Liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,306.1 1,276.8 2.3
Working Capital ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,820.0 1,928.7 (5.6)
Total DebtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,466.1 1,625.1 (9.8)
Total CapitalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,298.6 3,429.7 (3.8)
Quick Ratio ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.4:1 1.2:1
Working Capital RatioÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.4:1 2.5:1
Debt to Total CapitalÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 44.4% 47.4%
(1) Ratios that include cash and cash equivalents include $78.5 million of restricted cash held in escrow at June 27, 2003
to fund remaining principal and interest payments on the 6.45% and 8.20% Notes (see ""Financing Transactions'' for
further discussion).
(2) The Company had $200.0 million of accounts receivable sold under the accounts receivable securitization program at
June 28, 2002 (there were no drawings under this program at June 27, 2003). The receivables sold are excluded from
accounts receivable and drawings under this program are excluded from debt for the purpose of the balances and
ratios in the table above.
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