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TableofContents
SeeNote1andNote6intheNotestoConsolidatedFinancialStatementscontainedinItem15ofthisAnnualReporton
Form10-Kforfurtherdiscussiononthegoodwillimpairmenttestevaluation.
Contingencies and Litigation
From time to time, the Company may become a party to, or otherwise be involved in, various lawsuits, claims,
investigationsandotherlegalproceedingsintheordinarycourseofconductingitsbusiness.Whilelitigationissubjecttoinherent
uncertainties, management does not anticipate that any such matters will have a material adverse impact on the Company’s
financialcondition,liquidityorresultsofoperations.
The Company also is currently subject to various pending and potential legal matters and investigations relating to
compliance with governmental laws and regulations, including import/export and environmental matters. For certain of these
mattersitisnotpossibletodeterminetheultimateoutcome,andtheCompanycannotreasonablyestimatethemaximumpotential
exposureortherangeofpossiblelossforsuchmattersdueprimarilytobeinginthepreliminarystagesoftherelatedproceedings
andinvestigations.TheCompanycurrentlybelievesthattheresolutionofsuchmatterswillnothaveamaterialadverseeffecton
the Company’s financial position or liquidity, but could possibly be material to our results of operations in any one reporting
period.
Revenue Recognition and Related Policies
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred orservices
havebeenrendered,thesalespriceisfixedordeterminableandcollectabilityisreasonablyassured.Generally,thesecriteriaare
met upon the actual shipment or delivery of products or services to the customer depending upon the underlying sales terms.
Accordingly, although management makes certain estimates related to possible returns of products from customers, sales
discountsandcustomerrebates,suchamountsdonotrequiresignificantjudgmentsorassumptions.
Provisionsforsalesreturns are estimated basedon historical salesreturns experience,credit memoexperience andother
known factors. Provisions are made for sales discounts and rebates, which are primarily timing or volume-specific, and are
generallybasedonhistoricaltrendsandanticipatedcustomerbuyingpatterns.SalesfrommaintenancecontractswhereAvnetis
consideredtobetheprincipalaredeferredandrecognizedassalesoverthelifeofthemaintenanceagreementandarenotmaterial
totheconsolidatedresultsofoperationsoftheCompany.
The Company evaluates the criteria outlined in ASC Topic 605-45, Principal Agent Considerations , in determining
whetheritisappropriatetorecordthegrossamountofsalesandrelatedcostsorthenetamount(grossfeeslessrelatedcostof
sales or services) depending upon whether the Company is the principal or agent for certain sales arrangements. Generally,
transactionsthatqualifyfornetaccountingtreatmentconsistofthesaleofsupplierservicecontractsforwhichtheCompanyhas
no continuing involvement, certain sales of software for which the Company is acting as an agent or the performance of
fulfillmentlogisticsservicestodeliverproductforwhichtheCompanyisnottheprimaryobligor.
The Company must also make estimates related to the recognition of consideration received from suppliers for price
protection,productrebates,marketing/promotionalactivities,oranyotherconsiderationreceivedfromsuppliers.Consideration
received or due from these supplier programs are recognized when earned under the terms and conditions of the supplier
programs as adjustments to product costs, or selling, general and administrative expenses depending upon the nature and
contractualrequirements related totheconsideration received. Someof thesesupplier programsmayextend over one ormore
reportingperiods.
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