Avnet 2012 Annual Report Download - page 35

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Table of Contents
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company seeks to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange
rates by entering into financial arrangements, from time to time, which are intended to provide a hedge against all or a portion of the risks
associated with such volatility. The Company continues to have exposure to such risks to the extent they are not hedged.
The following table sets forth the scheduled maturities of the Company’s debt outstanding at June 30, 2012 (dollars in millions):
______________________
The following table sets forth the carrying value and fair value of the Company’s debt at June 30, 2012 (dollars in millions):
______________________
Many of the Company’
s subsidiaries, on occasion, purchase and sell products in currencies other than their functional currencies. This
subjects the Company to the risks associated with fluctuations in foreign currency exchange rates. The Company reduces this risk by utilizing
natural hedging (offsetting receivables and payables) as well as by creating offsetting positions through the use of derivative financial
instruments, primarily forward foreign exchange contracts with maturities of less than sixty days. The Company continues to have exposure to
foreign currency risks to the extent they are not hedged. The Company adjusts all foreign denominated balances and any outstanding foreign
exchange contracts to fair market value through the consolidated statements of operations. Therefore, the market risk related to foreign exchange
contracts is offset by changes in valuation of the underlying items being hedged. The asset or liability representing the fair value of foreign
exchange contracts is classified in the captions “other current assets” or “accrued expenses and other,”
as applicable, in the accompanying
consolidated balance sheets. A hypothetical 10% change in currency exchange rates under the contracts outstanding at June 30, 2012 would
result in an increase or decrease of approximately $53.4 million to the fair value of the forward foreign exchange contracts, which would
generally be offset by an opposite effect on the related hedged positions.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data are listed under Item 15 of this Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
The Company’
s management, including its Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the
Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)
34
Fiscal Year
2013
2014
2015
2016
2017
Thereafter
Total
Liabilities:
Fixed rate debt (1)
$
1.0
$
301.5
$
0.3
$
250.0
$
300.0
$
300.0
$
1,152.8
Floating rate debt
$
871.4
$
11.7
$
0.5
$
110.4
$
0.1
$
—
$
994.1
(1) Excludes discounts on long-
term notes.
Carrying Value
at
June 30, 2012
Fair Value at
June 30, 2012
Carrying Value
at
July 2, 2011
Fair Value at
July 2, 2011
Liabilities:
Fixed rate debt (1)
$
1,152.8
$
1,285.6
$
1,154.3
$
1,261.1
Average interest rate
6.1
%
6.1
%
Floating rate debt
$
994.1
$
994.1
$
365.3
$
365.3
Average interest rate
1.5
%
2.2
%
(1) Excludes discounts on long-
term notes.