Avnet 2003 Annual Report Download - page 30
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Please find page 30 of the 2003 Avnet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.the Americas is driven in large part by growth in the enterprise computing and storage markets oÅset, in part,
by continued reduced activity in the telecommunications and networking sectors. CM's EMEA and Asia sales
of $371 million and $45 million, respectively, were down 12.9% and up 38.1% in comparison to 2002 results.
AC's 2003 sales were $1.63 billion, down $48 million, or 2.9%, from 2002 sales of $1.68 billion. This
reduction is primarily a result of AC's continued focus on higher margin OEMs while reducing its customer
relationships in the highly competitive, low margin PC Builder market in all regions. AC Americas' sales of
$633 million in 2003 were down $96 million, or 13.2%, from 2002. This decline was somewhat oÅset by sales
within AC EMEA of $888 million, which were up 1.1% over 2002, primarily on the strength of the Euro, and
sales within AC Asia of $109 million, which were up 52.9% over 2002 sales, primarily due to the migration of
some business to the Asia region, similar to the eÅect on EM's business discussed above.
As discussed further in ""Restructuring and Other Charges,'' the Company announced subsequent to 2003
that it would combine the CM and AC operations on a global basis, which is expected to result in the
elimination of certain duplicative executive and support functions (no material eliminations in sales and
marketing positions are anticipated), the closing of certain logistics operations in the Americas and EMEA
and the elimination of certain duplicative IT platforms. This combination is not expected to result in any
material reduction in sales for the combined enterprises. CM and AC combined generated revenues in 2003 of
$4.06 billion, or 45% of consolidated sales as compared to combined revenues of $4.08 billion, or 46% of
consolidated sales, in 2002.
The Company completed 2002 with sales of $8.92 billion, down 30.4%, or $3.89 billion, from the record
sales of $12.81 billion recorded in 2001. As discussed above, the decrease in consolidated sales was due
primarily to the conÖuence of global and domestic economic forces that caused the severe downturn in the
technology markets the Company serves. EM sales were most signiÑcantly impacted as this group reported
sales of $4.84 billion in 2002, down $3.44 billion, or 42%, from 2001 sales of $8.29 billion. The drop within EM
is directly attributable to the global decline in semiconductor sales in 2002 consistent with the semiconductor
industry as a whole, which experienced its worst performance in annual revenue trends in calendar 2001. CM
sales of $2.40 billion were down $456 million, or 16%, from 2001 levels primarily due to similar macro-
economic factors as discussed above. AC sales of $1.68 billion in 2002 increased marginally by 0.4% from 2001
due primarily to growth in its European operations (aÅected, in part, by a full year of operations of RKE
Systems in 2002, acquired as part of the VEBA Group acquisition discussed in Item 1 of this Report) as well
as marginally positive growth in Asia.
Restructuring and Other Charges
The Company recorded a number of restructuring and other charges during the last three Ñscal years.
These charges relate primarily to three items: (1) charges stemming from acquisition and integration of newly
acquired businesses; (2) charges to record impairment in the Company's Internet-related investments and
(3) the reorganization of operations in each of the three major regions of the world in which the Company
operates, generally taken in response to business conditions at the time of the charge. The Company also
recorded a charge for the cumulative eÅect of change in accounting principle, which is further discussed in
""Change in Accounting Principle Ì Goodwill'' in this MD&A, and debt extinguishment costs associated with
the Company's redemption of certain outstanding debt obligations, which is further discussed in ""Liquidity
and Capital Resources.''
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