Avnet 2015 Annual Report Download - page 39

TableofContents
Manyof theCompany’ssubsidiariespurchaseandsell products incurrenciesotherthantheir functional currencies. This
subjectstheCompanytotherisksassociatedwithfluctuationsinforeigncurrencyexchangerates.TheCompanyreducesthisrisk
byutilizingnaturalhedging(i.e.,offsettingreceivablesandpayables)aswellasbycreatingoffsettingpositionsthroughtheuseof
derivativefinancialinstruments,primarilyforwardforeigncurrencyexchangecontractstypicallywithmaturitiesoflessthansixty
days(“economichedges”).TheCompanycontinuestohaveexposuretoforeigncurrencyriskstotheextenttheyarenothedged.
The Company adjusts any economic hedges to fair value through the consolidated statements of operations primarily within
“otherexpense,net.”Therefore,thechangesinvaluation of the underlying items being economically hedged are offsetby the
changesin fair value ofthe forwardforeigncurrency exchange contracts.TheCompany did not have materialgains or losses
relatedtotheforwardforeign currencyexchangecontractsduringfiscal2016and2015.Ahypothetical10%changeinforeign
currencyexchangeratesundertheforwardforeign currencyexchangecontractsoutstandingatJuly2,2016,wouldresultinan
increaseordecreaseofapproximately$58.0milliontothefairvalueoftheforwardforeigncurrencyexchangecontracts,which
wouldgenerallybeoffsetbyanoppositeeffectontheunderlyingexposurebeingeconomicallyhedged.SeeNote3intheNotes
to Consolidated Financial Statements contained in Item 15 of this Annual Report on Form 10-K for further discussion on
derivativefinancialinstruments.
Item 8. Financial Statements and Supplementary Data
ThefinancialstatementsandsupplementarydataarelistedunderItem15ofthisReport.
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Item 9. Changes in and Disagreements with Accountant s on Accounting and Financial Disclosure
None.
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Item 9A. Controls and Procedures
Disclosure Controls and Procedures
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, have evaluated the
effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)
undertheSecuritiesExchangeActof1934(the“ExchangeAct”))asoftheendofthereportingperiodcoveredbythisreporton
Form10-K.Basedonsuchevaluation,theChiefExecutiveOfficerandChiefFinancialOfficerhaveconcludedthat,asoftheend
of the period covered by this report on Form 10-K, the Company’s disclosure controls and procedures are effective such that
materialinformation requiredtobedisclosedbytheCompanyinthe reportsthatit filesorsubmits undertheExchange Actis
recorded,processed,summarizedandreported,withinthetimeperiodsspecifiedbytheSecuritiesandExchangeCommission’s
rulesandformsandisaccumulatedandcommunicatedtomanagement,includingtheCompany’sprincipalexecutiveofficerand
principalfinancialofficer,asappropriatetoallowtimelydecisionsregardingrequireddisclosure.
During the fourth quarter of fiscal 2016, the Company implemented an ERP system to support the EM Americas
region.Thisimplementationhasresultedinchangestocertaininternalcontroloverfinancialreporting.TheCompanyperformed
pre-andpost-implementationproceduresaspartofitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting.
There were no other changes to the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the
ExchangeAct) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over
financialreporting.
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