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TableofContents
adversely affected. An economic or industry downturn could adversely affect the collectability of these accounts receivable,
whichcouldresultinlongerpaymentcycles,increasedcollectioncostsanddefaultsinexcessofmanagement’sexpectations.A
significantdeteriorationintheCompany’sabilitytocollectonaccountsreceivableintheUnitedStatescouldalsoimpactthecost
oravailabilityoffinancingunderitsaccountsreceivablesecuritizationprogram.
The Company may not have adequate or cost-effective liquidity or capital resources.
The Company’s ability to satisfy its cash needs and implement its capital allocation strategy depends on its ability to
generate cash from operations and to access the financial markets, both of which are subject to general economic, financial,
competitive,legislative,regulatoryandotherfactorsthatarebeyondtheCompany’scontrol.
The Company may need to satisfy its cash needs through external financing. However, external financing may not be
availableonacceptabletermsoratall.AsofJuly2,2016,Avnethadtotaldebtoutstandingofapproximately$2.49billionunder
variousnotes,securedborrowingsandcommittedanduncommittedlinesofcreditwithfinancialinstitutions.TheCompanyneeds
cash to make interest payments on, and to repay, this indebtedness and for general corporate purposes, such as funding its
ongoingworkingcapitalandcapitalexpenditureneeds.Underthetermsofanyexternalfinancing,theCompanymayincurhigher
than expected financing expenses and become subject to additional restrictions and covenants. Any material increase in the
Company’sfinancingcostscouldhaveanadverseeffectonitsprofitability.
Undercertainofitscreditfacilities,theCompanyisrequiredtomaintaincertainspecifiedfinancialratiosandmeetcertain
tests.IftheCompanyfailstomeetthesefinancialratiosand/ortests,itmaybeunabletocontinuetoutilizethesefacilities.Ifthe
Company is unable to utilize these facilities, it may not have sufficient cash available to make interest payments, to repay
indebtedness or for general corporate needs. General economic or business conditions, domestic and foreign, may be less
favorablethanmanagementexpectsandcouldadverselyimpacttheCompany’ssalesoritsabilitytocollectreceivablesfromits
customers,whichmayimpactaccesstotheCompany’saccountsreceivablesecuritizationprogram.
In order to be successful, the Company must attract, retain, train, motivate and develop key employees, and failure to do so
could adversely impact the Company’s results and strategic initiatives.
Inordertobesuccessful,theCompanymustattract,retain,train,motivateanddevelopqualifiedexecutivesandotherkey
employees.Identifying,developing internally or hiring externally, training andretainingqualifiedemployeesarecriticaltothe
Company’s future, and competition for experienced employees in the Company’s industry can be intense. Changing
demographics and labor work force trends may result in a loss of knowledge and skills as experienced workers leave the
Company.Inaddition,asglobalopportunitiesandindustrydemandshifts,andastheCompanyexpandsitsofferings,realignment,
trainingandhiringofskilledresourcesmaynotbesufficientlyrapid.FromtimetotimetheCompanyhaseffectedrestructurings,
which eliminate a number of positions. Even if such personnel are not directly affected by the restructuring effort, such
terminationscanhaveanegativeimpactonmoraleandtheCompany’sabilitytoattractandhirenewqualifiedpersonnelinthe
future.IftheCompanylosesexistingqualifiedpersonnelorisunabletohirenewqualifiedpersonnel,asneeded,theCompany’s
business,financialconditionandresultsofoperationscouldbeseriouslyharmed.
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