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PART I
Item 1. Business
Avnet, Inc., incorporated in New York in 1955, together with its consolidated 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. With sales of $14.25 bil-
lion in fiscal 2006, 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''), electronic manufacturing services (""EMS'') providers, original design manufacturers
(""ODMs''), and value-added resellers (""VARs''). 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 has two primary operating groups Ì 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 regional presidents and senior executives
within the operating group that manage the accounting and finance, facilities, logistics and other administra-
tive 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.
On July 5, 2005, the Company completed the acquisition of Memec Group Holdings Limited
(""Memec''), a global distributor that markets and sells a portfolio of semiconductor devices from industry-
leading suppliers. Memec also provided customers with engineering expertise and design services. The Memec
acquisition expanded EM's business in each of the three major economic regions and provided Avnet with a
presence in the Japanese distribution market, the only major semiconductor market in which Avnet did not
previously have any operations. Over the course of fiscal year 2006, Memec's operations were integrated into
EM's regional structure and the integration was completed by the end of fiscal 2006. 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.
During the third quarter of fiscal 2006, the Company divested two small TS businesses with aggregate
annual revenue of approximately $300 million focused on selling directly to end-users. The decision to divest
the two businesses allows TS to focus on its core competency in two tier distribution. During the fourth quarter
of fiscal 2006, the Company divested two small, non-core EM business units in EMEA. The divested
businesses had an annual revenue run rate of approximately $150 million.
A summary of each operating group and their businesses is presented below. Further financial
information by operating group and geography is provided 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'') on behalf of over 300 of the world's leading electronic component manufacturers. EM markets and
sells its products and services to a diverse customer base spread across end-markets including communica-
3