Avnet 2005 Annual Report Download - page 15

The acquisition of Memec will provide for expansion of EM in each of the three major economic regions.
The combination of Memec's Asian operations with Avnet's already industry-leading position, based on sales,
in the Asia region will provide Avnet with a dominant position in this key growth region. Memec's established
position in Japan Ì the only U.S.-based distributor with such a presence in the Japanese market Ì also
represents a significant opportunity by providing entry into this major electronic component marketplace. In
addition, because Memec's operations and business model is similar to Avnet's, management believes
significant synergies can be obtained in the combined businesses, thus allowing for significant operating cost
reductions upon completion of the integration of Memec.
With the exception of the acquisition of Memec subsequent to fiscal 2005, Avnet has made no significant
acquisitions in the past three years. Avnet has historically pursued a strategic acquisition program to grow its
presence in world markets for electronic components and compuer products. This program was a significant
factor in Avnet becoming one of the largest industrial distributors of such products worldwide. Avnet will
continue to pursue strategic acquisitions as part of its overall growth strategy, with its focus likely directed at
smaller targets in markets where the Company is seeking to expand its global presence or increase its scale and
scope where an acquisition may be beneficial. Management currently does not anticipate making any
significant acquisitions in the near term.
Major Products
One of Avnet's competitive strengths is the breadth and quality of the suppliers whose products it
distributes. In fiscal 2005, IBM represented the only supplier from which sales of its products exceeded 10% of
the Company's consolidated sales. During fiscal 2005, IBM products accounted for approximately 18.7% of
the Company's sales.
Listed in the table below are the major product categories and the Company's approximate sales of each
during the past three fiscal years:
Years Ended
July 2, July 3, June 27,
2005 2004 2003
(Millions)
Semiconductors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 6,082.2 $ 5,663.3 $4,819.1
Computer products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,003.8 3,656.8 3,457.8
Connectors ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 481.7 442.8 376.3
Passives, electromechanical and other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 499.1 481.8 395.2
$11,066.8 $10,244.7 $9,048.4
As of July 2, 2005, the Company had more than 250 locations worldwide, as well as a limited number of
instances where Avnet-owned product is stored in customer facilities. Many of these locations contain sales,
warehousing and administrative functions for multiple sales and marketing units. Avnet sells to customers in
approximately 70 countries.
Competition & Markets
Avnet is one of the world's largest industrial distributors, based on sales, of electronic components and
computer products.
The electronic component and computer product industry continues to be extremely competitive and is
subject to rapid technological advances. The Company's major competitors are Arrow Electronics, Inc.,
Future Electronics, World Peace Group and Agilysys, Inc. There are also certain smaller, specialized
competitors who focus upon one market or product or a particular sector. As a result of these factors, Avnet
must remain competitive in its pricing of goods and services.
Another key competitive factor in the electronic component and computer product distribution industry
as a whole is the need to carry a sufficient amount of inventory to meet rapid delivery requirements of
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