Avnet 2015 Annual Report Download - page 32

TableofContents
Duringfiscal2014,theCompanyused$116.9millionofcashforacquisitions,netofcashacquired,and$123.2millionfor
capitalexpendituresprimarilyrelatedtoinformationsystemdevelopmentcostsandcomputerhardwareandsoftwarepurchases.
Financing Transactions
TheCompanyusesavarietyoffinancingarrangements,bothshort-termandlong-term,tofunditsoperationsinadditionto
cashgeneratedfromoperations.TheCompanyalsousesseveralsourcesoffundingsothatitdoesnotbecomeoverlydependent
ononesourceandtoachievelowercost of funding through these different alternatives.These financingarrangements include
publicbonds,short-termandlong-termbankloans, arevolvingcreditfacility(the“Credit Facility”andanaccountsreceivable
securitizationprogram(the“Program”).
TheCompany hasseveralsmalllines of creditandotherforms ofbankdebtinthe U.S.andvarious foreign locationsto
fund the short-term working capital, foreign exchange, overdraft and letter of credit needs of its wholly owned subsidiaries
globally.Avnetgenerallyguaranteesitssubsidiaries’ obligationsundersuchdebtfacilities. Outstandingborrowingsundersuch
formsofdebtasoftheendoffiscal2016was$104.1million.
SeeNote7,“Debt”totheCompany’sconsolidatedfinancialstatementsincludedinItem15ofthisAnnualReportonForm
10-KforadditionalinformationonfinancingtransactionsincludingtheCreditFacility,theProgramandtheoutstandingNotesas
ofJuly2,2016.TheCompanywasincompliancewithallcovenantsundertheCreditFacilityandtheProgramasofJuly2,2016.
Covenants and Conditions
TheProgramrequirestheCompanytomaintaincertainminimuminterestcoverageandleverageratiosinordertocontinue
utilizing the Program. The Program also contains certain covenants relating to the quality of the receivables sold. If these
conditionsarenotmet,theCompanymaynotbeabletoborrowanyadditionalfundsandthefinancialinstitutionsmayconsider
thisanamortizationevent,asdefinedintheProgramagreements,whichwouldpermitthefinancialinstitutionstoliquidatethe
accountsreceivablessoldtocoveranyoutstandingborrowings.CircumstancesthatcouldaffecttheCompany’sabilitytomeetthe
required covenants and conditions of the Program include the Company’s ongoing profitability and various other economic,
marketandindustryfactors.ManagementdoesnotbelievethatthecovenantsundertheProgramlimittheCompany’sabilityto
pursueits intended business strategyorits future financing needs.TheCompany was in compliance withallcovenants of the
ProgramasofJuly2,2016.
The Credit Facility contains certain covenants with various limitations on debt incurrence, share repurchases, dividends,
investmentsandcapitalexpendituresandalsoincludesfinancialcovenantsrequiringtheCompanytomaintainminimuminterest
coverageandleverageratios.ManagementdoesnotbelievethatthecovenantsintheCreditFacilitylimittheCompany’sability
topursueitsintendedbusinessstrategyoritsfuturefinancingneeds.TheCompanywasincompliancewithallcovenantsofthe
CreditFacilityasofJuly2,2016.
SeeLiquiditybelowforfurtherdiscussionoftheCompany’savailabilityunderthesevariousfacilities.
Liquidity
TheCompanyhadcashandcashequivalentsof$1.03billionasofJuly2,2016,ofwhich$972.7millionwasheldoutside
theU.S.AsofJune27,2015,theCompanyhadcashandcashequivalentsof$932.6million,ofwhich$855.8millionwasheld
outsideoftheU.S.
31
