Concentration of Risk

12 Months Ended

Mar. 27, 2016

Concentration of Risk

Concentration of Risk

Note 19. Concentration of Risk

Sales to customers and purchases from vendors are largely governed by individual sales or purchase orders, so there is no guarantee of future business. In some cases, the Company has more formal agreements with significant customers or vendors, but they are largely administrative in nature and are terminable by either party upon several months or otherwise short notice and they typically contain no obligation to make purchases from TESSCO. In the event a significant customer decides to make its purchases from another source, experiences a significant change in demand internally or from its own customer base, becomes financially unstable, or is acquired by another company, the Company’s ability to generate revenues from these customers may be significantly affected, resulting in an adverse effect on its financial position and results of operations.

The Company is dependent on third-party equipment manufacturers, distributors and dealers for all of its supply of wireless communications equipment. For fiscal years 2016, 2015, and 2014, sales of products purchased from the Company's top ten vendors accounted for 42%,  41%, and 43% of total revenues, respectively. In fiscal year 2015 and 2014, sales of product purchased from the Company’s largest vendor, CommScope Inc., accounted for approximately 14% and 16% of revenue, respectively. In fiscal year 2016, sales of product purchased from the Company’s largest vendor, Otter Products LLC, accounted for approximately 15% of total revenues and sales of product purchased from CommScope Inc. accounted for approximately 11%. The Company is dependent on the ability of its vendors to provide products on a timely basis and on favorable pricing terms. The Company believes that alternative sources of supply are available for many of the product types it carries, but not for all products offered by the Company. The loss of certain principal suppliers, including Otter Products LLC and CommScope Inc., or of other suppliers whose products may be difficult to source on comparable terms elsewhere, or the loss of one or more of certain ongoing affinity relationships, would have a material adverse effect on the Company.

As noted, the Company's future results could also be negatively impacted by the loss of certain customers, and/or vendor relationships. For fiscal years 2016, 2015, and 2014, sales of products to the Company's top ten customer relationships accounted for 22%,  20%, and 19% of total revenues, respectively. No customer accounted for more than 7% of total revenues in fiscal year 2016, 2015, and 2014.