Avnet 2015 Annual Report Download - page 37
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Please find page 37 of the 2015 Avnet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.TableofContents
SeeNote1andNote6intheNotestoConsolidatedFinancialStatementscontainedinItem15ofthisAnnualReporton
Form10-Kforfurtherdiscussiononthegoodwillimpairmenttestevaluation.
Contingencies and Litigation
From time to time, the Company may become a party to, or otherwise be involved in, various lawsuits, claims,
investigationsandotherlegalproceedingsintheordinarycourseofconductingitsbusiness.Whilelitigationissubjecttoinherent
uncertainties, management does not anticipate that any such matters will have a material adverse impact on the Company’s
financialcondition,liquidityorresultsofoperations.
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
mattersitisnotpossibletodeterminetheultimateoutcome,andtheCompanycannotreasonablyestimatethemaximumpotential
exposureortherangeofpossiblelossforsuchmattersdueprimarilytobeinginthepreliminarystagesoftherelatedproceedings
andinvestigations.TheCompanycurrentlybelievesthattheresolutionofsuchmatterswillnothaveamaterialadverseeffecton
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 orservices
havebeenrendered,thesalespriceisfixedordeterminableandcollectabilityisreasonablyassured.Generally,thesecriteriaare
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
discountsandcustomerrebates,suchamountsdonotrequiresignificantjudgmentsorassumptions.
Provisionsforsalesreturns are estimated basedon historical salesreturns experience,credit memoexperience andother
known factors. Provisions are made for sales discounts and rebates, which are primarily timing or volume-specific, and are
generallybasedonhistoricaltrendsandanticipatedcustomerbuyingpatterns.SalesfrommaintenancecontractswhereAvnetis
consideredtobetheprincipalaredeferredandrecognizedassalesoverthelifeofthemaintenanceagreementandarenotmaterial
totheconsolidatedresultsofoperationsoftheCompany.
The Company evaluates the criteria outlined in ASC Topic 605-45, Principal Agent Considerations , in determining
whetheritisappropriatetorecordthegrossamountofsalesandrelatedcostsorthenetamount(grossfeeslessrelatedcostof
sales or services) depending upon whether the Company is the principal or agent for certain sales arrangements. Generally,
transactionsthatqualifyfornetaccountingtreatmentconsistofthesaleofsupplierservicecontractsforwhichtheCompanyhas
no continuing involvement, certain sales of software for which the Company is acting as an agent or the performance of
fulfillmentlogisticsservicestodeliverproductforwhichtheCompanyisnottheprimaryobligor.
The Company must also make estimates related to the recognition of consideration received from suppliers for price
protection,productrebates,marketing/promotionalactivities,oranyotherconsiderationreceivedfromsuppliers.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
contractualrequirements related totheconsideration received. Someof thesesupplier programsmayextend over one ormore
reportingperiods.
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