Avnet 2011 Annual Report Download - page 14

Table of Contents
Major disruptions to the Company’s logistics capability could have a material adverse impact on the Company’s operations.
The Company’
s global logistics services are operated through specialized and centralized distribution centers around the globe.
The Company also depends almost entirely on third party transportation service providers for the delivery of products to its customers.
A major interruption or disruption in service at one or more of our distribution centers for any reason (such as natural disasters,
pandemics, or significant disruptions of services from our third party providers) could cause cancellations or delays in a significant
number of shipments to customers and, as a result, could have a severe impact on the Company’
s business, operations and financial
performance.
The Company may not have adequate or cost-effective liquidity or capital resources.
The Company’
s ability to satisfy its cash needs depends on its ability to generate cash from operations and to access the financial
markets, both of which are subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond
the Company’s control.
The Company may need to satisfy its cash needs through external financing. However, external financing may not be available
on acceptable terms or at all. As of July 2, 2011, Avnet had total debt outstanding of $1.517 billion under various notes and committed
and uncommitted lines of credit with financial institutions. The Company needs cash to make interest payments on, and to refinance,
this indebtedness and for general corporate purposes, such as funding its ongoing working capital and capital expenditure needs.
Under the terms of any external financing, the Company may incur higher than expected financing expenses and become subject to
additional restrictions and covenants. Any material increase in the Company’
s financing costs could have a material adverse effect on
its profitability.
Under some of its credit facilities, the Company is required to maintain certain specified financial ratios and meet certain tests. If
the Company fails to meet these financial ratios and tests, it may be unable to continue to utilize these facilities. If the Company is
unable to utilize these facilities, it may not have sufficient cash available to make interest payments on and refinance indebtedness and
for general corporate needs.
The agreements governing some of the Company’
s financings contain various covenants and restrictions that limit the discretion
of management in operating its business and could prevent us from engaging in some activities that may be beneficial to the
Company’s business.
The agreements governing the Company’s financing, including its credit facility and the indentures governing the Company’
s
outstanding notes, contain various covenants and restrictions that, in certain circumstances, limit the Company’
s ability and the ability
of certain subsidiaries to:
As a result of these covenants and restrictions, the Company may be limited in the future in how it conducts its business and may
be unable to raise additional debt, compete effectively or make further investments.
In addition to the specific factors described above, general economic or business conditions, domestic and foreign, may be less
favorable than management expected and, if such conditions persist for a sustained period of time, could eventually adversely impact
the Company’s sales or its ability to collect receivables from some of its customers.
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•
grant liens on assets;
•
make restricted payments (including paying dividends on capital stock or redeeming or repurchasing capital stock);
•
make investments;
•
merge, consolidate or transfer all or substantially all of the Company
’
s assets;
•
incur additional debt; or
•
engage in certain transactions with affiliates.