Avnet 2014 Annual Report Download - page 31

ability to pursue its intended business strategy or its future financing needs. The Company was in compliance with all covenants of the 2012
Credit Facility as of June 28, 2014 .
See Liquidity below for further discussion of the Company’s availability under these various facilities.
Liquidity
The Company had cash and cash equivalents of $929.0 million as of June 28, 2014 , of which $815.4 million
was held outside the U.S. As
of June 29, 2013 , the Company had cash and cash equivalents of $1.01 billion , of which $918.4 million was held outside of the U.S.
As of June 28, 2014 , the Company had a combined total borrowing capacity of $1.80 billion
under the 2012 Credit Facility and the
Program. There were $12.0 million in borrowings outstanding and $2.0 million
in letters of credit issued under the 2012 Credit Facility and
$615.0 million outstanding under the Program. During fiscal 2014
, the Company had an average daily balance outstanding under the 2012
Credit Facility of approximately $7.0 million and $534.0 million under the Program. During fiscal 2013
, the Company had an average daily
balance outstanding under the 2012 Credit Facility of approximately $5.0 million and $570.0 million under the Program.
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 ongoing
working capital, capital expenditure needs and to support acquisitions. These balances are currently expected to be permanently reinvested
outside the United States. If these funds were needed for general corporate use in the United States, the Company would incur significant income
taxes to repatriate cash held in foreign locations, but only to the extent the repatriated cash is in excess of any outstanding intercompany loans
due to Avnet, Inc. from 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 2014 , the Company utilized $116.9 million
of cash, net of cash acquired, for acquisitions. The Company has made, and
expects to continue to make, strategic investments through acquisition activity to the extent the investments strengthen Avnet’
s competitive
position and/or meet management’s return on capital thresholds.
In addition to continuing to make investments in acquisitions, as of June 28, 2014
, the Company may repurchase up to an aggregate of
$215.9 million of the Company’
s common stock through a $750.0 million share repurchase program approved by the Board of Directors in prior
years. 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 share 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 share price, corporate and regulatory requirements, and prevailing
market conditions. Since the beginning of the repurchase program through the end of fiscal 2014 , the Company has repurchased
18.1 million
shares at an average market price of $29.51 per share for total cost of $534.1 million
. Shares repurchased were retired. Additionally, the
Company currently expects to pay quarterly cash dividends on shares of its common stock, subject to approval of the Board of Directors. During
fiscal 2014 , the Company paid cash dividends of $82.8 million on its common stock or $0.15 per share on a quarterly basis.
In July 2014, subsequent to the end of fiscal 2014, the Company terminated the 2012 Credit Facility and entered into a five-
year $1.25
billion senior unsecured revolving credit facility (the "2014 Credit Facility") with a syndicate of banks, consisting of revolving credit facilities
and the issuance of up to $150.0 million of letters of credit. Subject to certain conditions, the 2014 Credit Facility may be increased up to $1.50
billion. Under the 2014 Credit Facility, the Company may select from various interest rate options, currencies and maturities. The 2014 Credit
Facility contains certain covenants, which are substantially similar to those covenants contained in the 2012 Credit Facility. The 2014 Credit
Facility is scheduled to mature in July 2019.
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.
Management believes that Avnet’s available borrowing capacity, its current cash on hand and the Company’
s expected ability to generate
operating cash flows in the future will be sufficient to meet its future liquidity needs. The Company also may issue debt or equity securities in
the future and management believes the Company will have adequate access to the capital markets, if needed.
The following table highlights the Company’s liquidity and related ratios for the past two fiscal years:
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