Avnet 2009 Annual Report Download - page 13

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Table of Contents
The potential criminal penalties for violations of export regulations and anti-corruption laws, particularly the
U.S. Foreign Corrupt Practices Act, create heightened risks for the Company’s international operations. In the event
that a governing regulatory body determined that the Company had violated applicable export regulations or anti-
corruption laws, the Company could be fined significant sums, incur sizable legal defense costs and/or its export
capabilities could be restricted, which could have a material adverse effect on the Company’s business. While the
Company has and will continue to adopt measures designed to ensure compliance with these laws, the Company
cannot be assured that such measures will be adequate or that its business will not be materially impacted in the event
of an alleged violation.
The Company’s acquisition strategy may not produce the expected benefits, which may adversely affect the
Company’s results of operations.
Avnet historically has pursued a strategic acquisition program to grow its global markets for electronic and
computer products. That program has enabled Avnet to solidify and maintain its leadership position in the
marketplace. During fiscal 2009, Avnet completed five acquisitions. Risks and uncertainties are inherent in the
mergers and acquisition process in that such activities may divert management’s attention from existing business
operations. In addition, the Company may not be successful in integrating the acquired businesses or the integration
may be more difficult, costly or time-consuming than anticipated. Consequently, the Company may experience
disruptions that could, depending on the size of the acquisition, have a material adverse effect on its business.
Furthermore, the Company may not realize all of the anticipated benefits from its acquisitions, which could adversely
affect the Company’s financial performance.
If the Company fails to maintain effective internal controls, it may not be able to report its financial results
accurately or timely or detect fraud, which could have a material adverse effect on the Company’s business or
stock price.
Effective internal controls are necessary for the Company to provide reasonable assurance with respect to its
financial reports and to effectively prevent fraud. If the Company cannot provide reasonable assurance with respect
to its financial reports and effectively prevent fraud, its brand and operating results could be harmed. Pursuant to the
Sarbanes-Oxley Act of 2002, the Company is required to furnish a report by management on internal control over
financial reporting, including management’s assessment of the effectiveness of such control. Internal control over
financial reporting may not prevent or detect misstatements because of its inherent limitations, including the
possibility of human error, the circumvention or overriding of controls, or fraud. Therefore, even effective internal
controls cannot provide absolute assurance with respect to the preparation and fair presentation of financial
statements. In addition, projections of any evaluation of effectiveness of internal control over financial reporting to
future periods are subject to the risk that the control may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. If the Company fails to maintain the
adequacy of its internal controls, including any failure to implement required new or improved controls, or if the
Company experiences difficulties in their implementation, the Company’s business and operating results could be
harmed, and the Company could fail to meet its reporting obligations, which could have a material adverse effect on
its business and the share price.
10
• foreign currency fluctuations and the impact on the Company’s reported results of operations of the
translation of the foreign currencies to U.S. dollars;
•
import and export duties and value
-
added taxes;
• compliance with foreign and domestic import and export regulations and anti-corruption laws, the failure of
which could result in severe penalties including monetary fines, criminal proceedings and suspension of
export privileges;
•
changing tax laws and regulations;
•
political instability, terrorism and potential military conflicts;
•
inflexible employee contracts in the event of business downturns; and
•
the risk of non
compliance with local laws.