Avnet 2012 Annual Report Download - page 33

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Table of Contents
The Company had cash and cash equivalents of $1.01 billion as of June 30, 2012, of which $874.0 million was held outside the U.S. As of
July 2, 2011, the Company had cash and cash equivalents of $675.3 million, of which $613.2 million was held outside of the U.S. Liquidity is
subject to many factors, such as normal business operations as well as general economic, financial, competitive, legislative, and regulatory
factors that are beyond the Company’s control. Cash balances generated and held in foreign locations are used for on-
going working capital,
capital expenditures and to support acquisitions. These balances are currently expected to be permanently reinvested outside the U.S. If these
funds were needed in the U.S., the Company would incur significant income taxes to repatriate cash held in foreign locations to the extent they
are in excess of outstanding intercompany loans due to Avnet, Inc. from the foreign subsidiaries. In addition, local government regulations may
restrict the Company’
s ability to move funds among various locations under certain circumstances. Management does not believe such
restrictions would limit the Company’s ability to pursue its intended business strategy.
During fiscal 2012, the Company utilized $313.2 million
of cash, net of cash acquired, for acquisitions. The Company has been making
and expects to continue to make strategic investments through acquisition activity to the extent the investments strengthen Avnet’
s competitive
position and meet management’s return on capital thresholds.
In addition to continuing to make investments in acquisitions, the Company may repurchase up to an aggregate of $500 million of the
Company’
s common stock through a share repurchase program approved by the Board of Directors in August 2011. In August 2012, the Board
of Directors approved adding $250 million to the share repurchase program. With this increase, the Company may repurchase up to a total of
$750 million of the Company's common stock under the share purchase program. The Company plans to repurchase stock from time to time at
the discretion of management, subject to strategic considerations, market conditions and other factors. The Company may terminate or limit the
stock repurchase program at any time without prior notice. The timing and actual number of shares purchased will depend on a variety of factors
such as price, corporate and regulatory requirements, and prevailing market conditions. Since inception of the program in August 2011 through
the end of fiscal 2012, the Company repurchased 11.3 million shares at average market price of $28.90 per share for total cost of $325.9 million.
This amount differs from the cash used for repurchases of common stock on the consolidated statement of cash flows to the extent repurchases
were not settled at the end of the fiscal year. Shares repurchased were retired.
During periods of weakening demand in the electronic component and enterprise computer solutions industry, the Company typically
generates cash from operating activities. Conversely, the Company is more likely to use operating cash flows for working capital requirements
during periods of higher growth. During fiscal 2012, the Company generated $528.7 million
in cash from operations as revenue declined 3%
over the prior year. Management believes that Avnet’s borrowing capacity, its current cash availability and the Company’
s expected ability to
generate operating cash flows are sufficient to meet its projected financing needs.
The following table highlights the Company’s liquidity and related ratios for the past two fiscal years:
COMPARATIVE ANALYSIS — LIQUIDITY
______________________
32
Years Ended
June 30,
2012
July 2,
2011
Percentage
Change
(Dollars in millions)
Current Assets
$
8,254.4
$
8,227.2
0.3
%
Quick Assets
5,614.2
5,439.6
3.2
Current Liabilities
4,798.7
4,477.7
7.2
Working Capital
(1)
3,455.7
3,749.5
(7.8
)
Total Debt
2,144.4
1,516.6
41.4
Total Capital (total debt plus total shareholders’ equity)
6,050.1
5,572.7
8.6
Quick Ratio
1.2:1
1.2:1
Working Capital Ratio
1.7:1
1.8:1
Debt to Total Capital
35.4
%
27.2
%
(1)
This calculation of working capital is defined as current assets less current liabilities.