Avnet 2015 Annual Report Download - page 14
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adversely affected. An economic or industry downturn could adversely affect the collectability of these accounts receivable,
whichcouldresultinlongerpaymentcycles,increasedcollectioncostsanddefaultsinexcessofmanagement’sexpectations.A
significantdeteriorationintheCompany’sabilitytocollectonaccountsreceivableintheUnitedStatescouldalsoimpactthecost
oravailabilityoffinancingunderitsaccountsreceivablesecuritizationprogram.
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,regulatoryandotherfactorsthatarebeyondtheCompany’scontrol.
The Company may need to satisfy its cash needs through external financing. However, external financing may not be
availableonacceptabletermsoratall.AsofJuly2,2016,Avnethadtotaldebtoutstandingofapproximately$2.49billionunder
variousnotes,securedborrowingsandcommittedanduncommittedlinesofcreditwithfinancialinstitutions.TheCompanyneeds
cash to make interest payments on, and to repay, this indebtedness and for general corporate purposes, such as funding its
ongoingworkingcapitalandcapitalexpenditureneeds.Underthetermsofanyexternalfinancing,theCompanymayincurhigher
than expected financing expenses and become subject to additional restrictions and covenants. Any material increase in the
Company’sfinancingcostscouldhaveanadverseeffectonitsprofitability.
Undercertainofitscreditfacilities,theCompanyisrequiredtomaintaincertainspecifiedfinancialratiosandmeetcertain
tests.IftheCompanyfailstomeetthesefinancialratiosand/ortests,itmaybeunabletocontinuetoutilizethesefacilities.Ifthe
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
favorablethanmanagementexpectsandcouldadverselyimpacttheCompany’ssalesoritsabilitytocollectreceivablesfromits
customers,whichmayimpactaccesstotheCompany’saccountsreceivablesecuritizationprogram.
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.
Inordertobesuccessful,theCompanymustattract,retain,train,motivateanddevelopqualifiedexecutivesandotherkey
employees.Identifying,developing internally or hiring externally, training andretainingqualifiedemployeesarecriticaltothe
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.Inaddition,asglobalopportunitiesandindustrydemandshifts,andastheCompanyexpandsitsofferings,realignment,
trainingandhiringofskilledresourcesmaynotbesufficientlyrapid.FromtimetotimetheCompanyhaseffectedrestructurings,
which eliminate a number of positions. Even if such personnel are not directly affected by the restructuring effort, such
terminationscanhaveanegativeimpactonmoraleandtheCompany’sabilitytoattractandhirenewqualifiedpersonnelinthe
future.IftheCompanylosesexistingqualifiedpersonnelorisunabletohirenewqualifiedpersonnel,asneeded,theCompany’s
business,financialconditionandresultsofoperationscouldbeseriouslyharmed.
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