Avnet 2011 Annual Report Download - page 20

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Table of Contents
For an understanding of Avnet and the significant factors that influenced the Company’
s performance during the past three fiscal
years, the following discussion should be read in conjunction with the description of the business appearing in Item 1 of this Report
and the consolidated financial statements, including the related notes and schedule, and other information appearing in Item 15 of this
Report. The Company operates on a “52/53 week”
fiscal year. Fiscal 2011 and 2009 contained 52 weeks while fiscal 2010 contained
53 weeks. This extra week, which occurred in the first quarter of fiscal 2010, impacts the year-over-year analysis in this MD&A.
There are references to the impact of foreign currency translation in the discussion of the Company’
s results of operations.
Results for the full fiscal year 2011 or 2010 were not significantly impacted by the movement of foreign currency exchanges rates as,
for example, the U.S. Dollar strengthened against the Euro by approximately 2% during fiscal 2011 and the U.S. Dollar weakened
against the Euro by approximately 1% during fiscal 2010. However, fluctuations during the quarters of fiscal 2011 had a more
pronounced impact on the Company’s comparative results as described in the Company’s Form 10-Q’
s filed with the SEC. When the
stronger U.S. Dollar exchange rates of the current year are used to translate the results of operations of Avnet’
s subsidiaries
denominated in foreign currencies, the resulting impact is a decrease in U.S. Dollars of reported results as compared with the prior
period. When the U.S. Dollar weakens, the resulting impact is an increase in U.S. Dollars of reported results as compared with the
prior period. In the discussion that follows, this is referred to as the “
translation impact of changes in foreign currency exchange
rates.”
In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles
(“GAAP”), the Company also discloses certain non-GAAP financial information, including:
Management believes that providing this additional information is useful for the reader to better assess and understand operating
performance, especially when comparing results with previous periods or forecasting performance for future periods. Furthermore,
management typically monitors the business both including and excluding these items and uses these non-
GAAP measures to establish
operational goals and, in some cases, for measuring performance for compensation purposes. However, analysis of results and outlook
on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.
17
Item 7.
Management
’
s Discussion and Analysis of Financial Condition and Results of Operations
•
Income or expense items as adjusted for the translation impact of changes in foreign currency exchange rates, as
discussed above.
•
Sales adjusted for certain items that impact the year-over-
year analysis, which included the impact of acquisitions by
adjusting Avnet’
s prior periods to include the sales of businesses acquired as if the acquisitions had occurred at the
beginning of the period presented. In addition, for fiscal 2011 sales are adjusted for: (i) a divestiture by adjusting
Avnet’
s prior periods to exclude the sales of the business divested as if the divestiture had occurred at the beginning of
the period presented; (ii) the impact of the extra week of sales in the prior year first quarter due to the “52/53 week”
fiscal year, and (iii) the transfer of the existing embedded business from TS Americas to EM Americas that occurred
in the first quarter of fiscal 2011. Sales taking into account the combination of these adjustments are referred to as
“
pro forma sales
”
or
“
organic sales.
”
•
Operating income excluding restructuring, integration and other charges incurred in fiscal 2011, 2010 and 2009 as
well as the non-
cash goodwill and intangible asset impairment charges recognized during fiscal 2009. The
reconciliation to GAAP is presented in the following table.
Years Ended
July 2,
July 3,
June 27,
2011
2010
2009
(Thousands)
GAAP operating income (loss)
$
929,979
$
635,600
$
(1,018,998
)
Impairment charges
—
—
1,411,127
Restructuring, integration and other
77,176
25,419
99,342
Adjusted operating income
$
1,007,155
$
661,019
$
491,471