Avnet 2007 Annual Report Download - page 21

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Items Impacting Fiscal 2007 Sales
As discussed in Executive Summary, sales for fiscal 2007 as compared with fiscal 2006 were impacted by the
aggregate of (i) the sales of Access and Azure since the close of the acquisitions, (ii) sales of the divested EM and TS
businesses included in prior periods, and (iii) the change in classification of sales of supplier service contracts to a
net revenue basis. Comparative financial information is presented for acquisitions, divestitures and other items in
order to better assess and understand the Company’s revenue performance. The following tables present the sales of
acquisitions prior to their date of close; revenue from divestitures prior to their date of sale and the effect of the
change to net revenue reporting for periods prior to the implementation thereof for each quarter of fiscal 2007 and
2006.
Acquisition Sales Divested Sales
Gross to Net
Revenue Impact Total Impact
(Thousands)
Q1 Fiscal ‘07 ................. $450,248 $ — $ (95,810) $354,438
Q2 Fiscal ‘07 ................. 519,276 — (118,607) 400,669
Q3 Fiscal ‘07 ................. 16,155 — — 16,155
Q4 Fiscal ‘07 ................. 9,198 — — 9,198
Total ...................... $994,877 $ — $(214,417) $780,460
Acquisition Sales EM TS
Gross to Net
Revenue Impact Total Impact
Divested Sales
(Thousands)
Q1 Fiscal ‘06 ................ $ 432,444 $ (31,840) $ (42,855) $ (87,299) $ 270,450
Q2 Fiscal ‘06 ................ 492,578 (36,565) (50,962) (112,811) 292,240
Q3 Fiscal ‘06 ................ 435,483 (40,645) (18,628) (93,355) 282,855
Q4 Fiscal ‘06 ................ 578,683 (13,657) — (93,861) 471,165
Total ..................... $1,939,188 $(122,707) $(112,445) $(387,326) $1,316,710
Avnet’s consolidated sales in fiscal 2007 were a record $15.68 billion, up $1.43 billion, or 10.0%, over fiscal
2006 consolidated sales of $14.25 billion. The year-over-year growth occurred in all three geographic regions and in
both operating groups. Of the $1.43 billion year-over-year increase, approximately $340 million is a result of the
translation impact of changes in foreign currency exchange rates. More than half of the reported sales growth is
attributable to the Access and Azure acquisitions. As presented in the tables above, the comparison of sales to prior
year were also impacted by current year acquisitions, prior year divestitures and the change to net revenue reporting.
When the impacts of these items are considered in both the current and prior fiscal year, consolidated sales growth
would have been 5.7%. Both EM and TS contributed to the year-over-year improvement in sales. Specifically, fiscal
2007 sales for EM were $9.68 billion, up $417.4 million, or 4.5% over fiscal 2006. Fiscal 2007 sales for TS were
$6.00 billion, up $1.01 billion, or 20.2%, as compared with sales of $4.99 billion for fiscal 2006. Including Access
and Azure in the periods prior to the acquisition dates and including the change to net revenue reporting for periods
prior to third quarter of fiscal 2007, TS year-over-year sales growth would have been 5.5%.
EM sales of $9.68 billion were up 4.5% over fiscal 2006. Excluding the translation impact of changes in
foreign currency exchange rates (which management estimates increased current year sales by approximately
$221 million) and the impact of divestitures (which had sales of approximately $123 million in fiscal 2006), EM
sales grew 3.5% year over year. Although the rate of EM sales growth slowed to the low single digits at the end of
fiscal 2007, continued focus on operating efficiencies and profitable revenue enabled EM to grow operating income
more than five times faster than sales. Geographically, sales in the EM Americas were $3.72 billion, a decline of
1.5% from fiscal 2006 sales of $3.78 billion. The fiscal 2007 sales in the EM Americas region were significantly
impacted by a slow down in purchases from large EMS customers primarily due to softer demand in the
communications infrastructure end markets. Sales in the EM EMEA region increased 7.9% to $3.31 billion in
fiscal 2007 and increased 4.7% excluding the impact of divestitures and the changes in foreign currency exchange
rates. The comparative results for the EM EMEA were positively impacted by the changes in foreign currency
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