Avnet 2013 Annual Report Download - page 13

Table of Contents
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.
The Company may become involved in intellectual property disputes that could cause it to incur substantial costs, divert the efforts of
management or require it to pay substantial damages or licensing fees.
From time to time, the Company receives notifications alleging infringements of intellectual property rights allegedly held by others
relating to the Company's business or the products or services it sells. Litigation with respect to patents or other intellectual property matters
could result in substantial costs and diversion of management and other resources and could have an adverse effect on the Company's operations.
Further, the Company may be obligated to indemnify and defend its customers if the products or services the Company sells are alleged to
infringe any third-
party's intellectual property rights. While the Company may be able to seek indemnification from its suppliers for itself and its
customers against such claims, there is no assurance that it will be successful in obtaining such indemnification or that the Company will be fully
protected against such claims. If an infringement claim is successful, the Company may be required to pay damages or seek royalty or license
arrangements, which may not be available on commercially reasonable terms. The Company may have to stop selling certain products or
services, which could affect its ability to compete effectively.
Failure to comply with the requirements of environmental regulations could adversely affect its business.
The Company is subject to various federal, state, local and foreign laws and regulations addressing environmental and other impacts from
product disposal, use of hazardous materials in products, recycling of products at the end of their useful life and other related matters. While the
Company strives to ensure it is in full compliance with all applicable regulations, certain of these regulations impose liability without fault.
Additionally, the Company may be held responsible for the prior activities of an entity it acquired. Failure to comply with these regulations
could result in substantial costs, fines and civil or criminal sanctions, as well as third-
party claims for property damage or personal injury.
Further, environmental laws may become more stringent over time, imposing greater compliance costs and increasing risks and penalties
associated with violations.
Tax legislation initiatives or challenges to the Company's tax positions could impact the Company's results of operations and financial
condition.
As a multinational corporation, the Company is subject to the tax laws and regulations of the United States federal, state and local
governments and of many international jurisdictions. From time to time, legislation may be enacted that could adversely affect the Company's
tax positions. There can be no assurance that our effective tax rate and the resulting cash flow will not be adversely affected by these potential
changes in regulations. The tax laws and regulations of the various countries where the Company has operations are extremely complex and
subject to varying interpretations. Although the Company believes that its historical tax positions are sound and consistent with applicable laws,
regulations and existing precedent, there can be no assurance that these tax positions will not be challenged by relevant tax authorities or that the
Company would be successful in any such challenge.
If the Company fails to maintain effective internal controls, it may not be able to report its financial results accurately or timely or prevent or
detect fraud, which could have a material adverse effect on the Company’s business or the market price of the Company's securities.
Effective internal controls are necessary for the Company to provide reasonable assurance with respect to its financial reports and to
effectively prevent or detect fraud. If the Company cannot provide reasonable assurance with respect to its financial reports and effectively
prevent or detect 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 or the market price of the Company's securities.
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engage in certain transactions with affiliates.