Avnet 2015 Annual Report Download - page 58
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
wellasbycreating offsettingpositionsthroughtheuseofderivativefinancialinstruments,primarilyforward foreignexchange
contractstypicallywithmaturitiesoflessthan60days(“economichedges”).TheCompanycontinuestohaveexposuretoforeign
currency risks to the extent they are not hedged. The Company adjusts any economic hedges to fair value through the
consolidatedstatementsofoperationsprimarilywithin“otherexpense,net.”Therefore,thechangesinvaluationoftheunderlying
itemsbeingeconomicallyhedgedareoffsetbythechangesinfairvalueoftheforwardforeignexchangecontracts.Thefairvalue
offorwardforeigncurrencyexchangecontracts,whicharebaseduponLevel2criteriaundertheASC820fairvaluehierarchy,
are classified in the captions “other current assets” or “accrued expenses and other,” as applicable, in the accompanying
consolidatedbalancesheetsasofJuly2,2016,andJune27,2015.TheCompany’smasternettingandothersimilararrangements
withvariousfinancialinstitutionsrelatedtoderivativefinancialinstrumentsallowfortherightofoffset.TheCompany’spolicyis
topresent derivative financial instrumentswiththe same counterparty aseither anet assetor liabilitywhentheright of offset
exists.
The Company generally does not hedge its investments in its foreign operations. The Company does not enter into
derivativefinancialinstrumentsfortradingorspeculativepurposesandmonitorsthefinancialstabilityandcreditstandingofits
counterparties.
TheCompany’sforeigncurrencyexposurerelatesprimarilytointernationaltransactionswherethecurrencycollectedfrom
customerscanbedifferentfromthecurrencyusedtopurchasefromsuppliers.TheCompany’sforeignoperationstransactionsare
denominated primarily in the following currencies: U.S. Dollar, Euro, BritishPound, Canadian Dollar, Japanese Yen, Chinese
Yuan, Taiwan Dollar, Australian Dollar and Mexican Peso. The Company also, to a lesser extent, has foreign operations
transactionsinotherEuropean,LatinAmericanandAsianforeigncurrencies.
ThefairvaluesofderivativefinancialinstrumentsintheCompany’sconsolidatedbalancesheetsareasfollows:
July 2, June 27,
2016 2015
(Thousands)
Forwardforeigncurrencyexchangecontractsnotreceivinghedgeaccountingtreatment
recordedin:
Othercurrentassets $ 9,681.1 $ 3,517.5
Accruedexpenses 6,655.5 7,192.5
Theamountrecordedtootherexpense,netrelatedtoderivativefinancialinstrumentsareasfollows:
Fiscal Year Ended
July 2, June 27,
2016 2015
(Thousands)
Netderivativefinancialinstrumentgain(loss) $ (2,338.9) $ (4,478.1)
TheCompany’soutstandingeconomichedgeshadaveragematuritiesof53daysand55daysasofJuly2,2016,andJune
27,2015,respectively.UndertheCompany’seconomichedgingpolicies,gainsandlossesonthederivativefinancialinstruments
aresubstantiallyoffsetbythegainsandlossesontheunderlyingassetsorliabilitiesbeinghedged.
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