Avnet 2015 Annual Report Download - page 13

TableofContents
The Company’s information technology may be subject to cyber attacks, security breaches or computer hacking.
ExperiencedcomputerprogrammersandhackersmaybeabletopenetratetheCompany’ssecuritycontrolsandmisappropriateor
compromisesensitivepersonal,proprietaryorconfidentialinformation,createsystemdisruptionsorcauseshutdowns.Theyalso
may be able to develop and deploy malicious software programs that attack the Company’s systems or otherwise exploit any
securityvulnerabilities.TheCompany’ssystemsandthedatastoredonthosesystemsmayalsobevulnerabletosecurityincidents
orsecurityattacks, acts of vandalism or theft,coordinated attacksby activist entities,misplaced orlost data, humanerrors, or
other similar events that could negatively affect the Company’s systems and its data, as well as the data of the Company’s
businesspartners.Further,thirdparties,suchashostedsolutionproviders,thatprovideservicestotheCompany,couldalsobea
sourceofsecurityriskintheeventofafailureoftheirownsecuritysystemsandinfrastructure.
Thecoststoeliminateoraddresstheforegoingsecuritythreatsandvulnerabilitiesbeforeorafteracyberincidentcouldbe
significant. The Company’s remediation efforts may not besuccessful and could result in interruptions, delays or cessation of
service,andlossofexistingorpotentialsuppliersorcustomers.Inaddition,breachesoftheCompany’ssecuritymeasuresandthe
unauthorizeddisseminationofsensitivepersonal,proprietaryorconfidentialinformationabouttheCompany,itsbusinesspartners
or other third parties could expose the Company to significant potential liability and reputational harm. A s threats related to
cyber attacks develop and grow, the Company may also find it necessary to make further investments to protect its data and
infrastructure, which may impact the Company’s profitability. Although the Company has insurance coverage for protecting
againstcyberattacks,itmaynotbesufficienttocoverallpossibleclaims,andtheCompanymaysufferlossesthatcouldhavea
materialadverseeffectonitsbusiness.Asaglobalenterprise,theCompanycouldalsobenegativelyimpactedbyexistingand
proposed laws and regulations, as well as government policies and practices related to cybersecurity, data privacy, data
localizationanddataprotection.
Declines in the value of the Company’s inventory or unexpected order cancellations by the Company’s customers could
adversely affect its business, results of operations, financial condition and liquidity.
Theelectroniccomponentsandcomputerproductsindustriesaresubjecttorapidtechnologicalchange,newandenhanced
products,changes incustomerneedsandchanges inindustrystandardsand regulatory requirements, whichcancontribute to a
decline in value or obsolescence of inventory. Regardless of the general economic environment, it is possible that prices will
declineduetoadecreaseindemandoranoversupplyofproductsand,asaresultofthepricedeclines,theremaybegreaterrisk
ofdeclinesininventoryvalue.AlthoughitisthepolicyofmanyoftheCompany’ssupplierstooffercertainprotectionsfromthe
lossinvalueofinventory(suchaspriceprotectionandlimitedrightsofreturn),theCompanycannotbeassuredthatsuchpolicies
willfully compensateforthelossinvalue,or thatthesupplierswillchooseto,or beableto, honorsuchagreements, some of
which are not documented and,therefore, subject to the discretion of the supplier. Inaddition, the majority of the Company’s
salesaremade pursuanttoindividualpurchaseorders,ratherthanthroughlong-termsalescontracts.Wherethereisacontract,
such contract is generally terminable at will upon notice. The Company cannot be assured that unforeseen new product
developments, declines in the value of the Company’s inventory or unforeseen order cancellations by its customers will not
adverselyaffecttheCompany’sbusiness,resultsofoperations,financialconditionorliquidity.
Substantial defaults by the Company’s customers or suppliers on its accounts receivable or the loss of significant customers
could have a significant negative impact on the Company’s business, results of operations, financial condition or liquidity.
A significant portion of the Company’s working capital consists of accounts receivable.  If entities responsible for a
significant amount of accounts receivable were to cease doing business, direct their business elsewhere, become insolvent or
unable to pay the amount they owe the Company, orwere to become unwilling or unable to make such payments in a timely
manner,theCompany’sbusiness,resultsofoperations,financialconditionorliquiditycouldbe
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