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PART I
Item 1. Business
Avnet, Inc., incorporated in New York in 1955, together with its subsidiaries (the ""Company'' or
""Avnet''), is one of the world's largest industrial distributors, based on sales, of electronic components,
enterprise network and computer products and embedded subsystems. Avnet's sales in fiscal 2005 totaled
$11.07 billion. Memec Group Holdings Limited (""Memec''), acquired by Avnet on July 5, 2005, had sales of
$2.28 billion in the same twelve month period, which would represent over $13 billion of total sales for Avnet
and Memec in the twelve months ended July 2, 2005. Avnet creates a vital link in the technology supply chain
that connects over 300 of the world's leading electronic component and computer product manufacturers and
software developers as a single source for multiple products for a global customer base of over 100,000 original
equipment manufacturers (""OEMs''), contract manufacturers, original design manufacturers, value-added
resellers (""VARs'') and end-users. Avnet distributes electronic components, computer products and software
as received from its suppliers or with assembly or other value added by Avnet. Additionally, Avnet provides
engineering design, materials management and logistics services, system integration and configuration, and
supply chain advisory services.
Organizational Structure
Avnet is comprised of two operating groups called Electronics Marketing (""EM'') and Technology
Solutions (""TS''). Both operating groups have operations in each of the three major economic regions of the
world: the Americas; Europe, the Middle East and Africa (""EMEA''); and Asia. Each operating group has its
own management team that is led by a group president and includes senior executives within the operating
group that manage the accounting and finance, facilities, warehousing and other administrative tasks for each
operating group as a whole. Each operating group also has distinct financial reporting that is evaluated at the
corporate level and on which operating decisions and strategic planning for the Company as a whole are made.
Divisions exist within each operating group that serve primarily as sales and marketing units to further
streamline the sales and marketing efforts within each operating group and to enhance each operating group's
ability to work with its customers and suppliers, generally along more specific product lines or based upon
geography. However, each division relies heavily on the support services that are provided centrally within
each operating group and centralized support at the corporate level.
Subsequent to fiscal 2005 (on July 5, 2005), the Company completed the acquisition of Memec, a global
distributor that markets and sells a portfolio of semiconductor devices from industry-leading suppliers in
addition to providing customers with engineering expertise and design services.
Management anticipates that Memec, with sales of $2.29 billion in its fiscal year ended December 31,
2004, will be fully integrated into Avnet's EM operating group by the end of Avnet's fiscal 2006, with a
substantial portion of the integration completed by the end of the second quarter of fiscal 2006. The
acquisition of Memec will provide for expansion of EM in each of the three major economic regions as well as
allowing Avnet to gain entry into the Japanese market, the only major semiconductor market in which Avnet
did not previously have a presence.
See Acquisitions in this Item 1 and Note 2 to the consolidated financial statements appearing in Item 15
of this Report for further discussion of the Memec acquisition.
A summary of each operating group, and the divisions included in each group, is discussed below. Further
financial information by operating group and geography are also contained in Note 16 to the consolidated
financial statements appearing in Item 15 of this Report.
Electronics Marketing (""EM'')
EM markets and sells semiconductors and interconnect, passive and electromechanical devices
(""IP&E''), and also offers an array of value-added services to its customers, such as supply-chain
management, engineering design, inventory replenishment systems, connector and cable assembly and
3