Avnet 2011 Annual Report Download - page 21

Table of Contents
Results of Operations
Executive Summary
At the beginning of fiscal 2011, the Company completed three significant acquisitions that, when combined with strong organic
growth, delivered $7.4 billion in revenue growth, or 38.5%, year over year, to a record $26.5 billion. Although the acquired businesses
have product lines with lower operating margins than Avnet’
s other product lines, operating income grew faster than revenue with
46.3% growth year over year driven by operating leverage and synergies as a result of integration activities that were on-
going
through the fiscal year. Finally, earnings per share on a diluted basis grew faster than revenue and operating income with an increase
of 63% year over year.
Year-over-
year organic revenue growth for EM was 21.9% and was strongest in the EMEA region due to demand in the
industrial markets. Year-over-
year organic revenue growth for TS was 11.3% and was driven primarily by demand for storage and
servers. Gross profit margin was down 19 basis points year over year to 11.7% as the acquired Bell business has lower gross profit
margins than the Company’
s legacy businesses due to its product mix. EM gross profit margin was up 10 basis points year over year
which was impacted by the combination of improvement in the EM core business, partially offset by the lower gross profit margin
embedded business acquired from Bell and the embedded business that was transferred from TS Americas. TS gross profit margin
declined 52 basis points year over year primarily attributable to the EMEA region which was impacted by the integration of the Bell
business because of its lower gross profit margin profile than the other TS EMEA product lines.
Operating income margin was up 19 basis points year over year to 3.5%. EM operating income margins improved 105 basis
points year over year to 5.5%. The improvement was attributable to operating leverage primarily in EMEA which was due to strong
revenue growth and continued expense efficiencies. TS operating income margin declined 57 basis points year over year primarily due
to lower operating income margins of the acquired Bell business. The integrations of the acquired businesses have been completed as
of the end of fiscal 2011. The businesses acquired during fiscal 2011 impacted both operating groups and, as a result of integration
activities that occurred during the fiscal year, the fiscal 2011 results were positively impacted by synergies to the extent actions were
completed. In particular, the expected synergies for the Bell acquisition were estimated to be over $60 million in annualized cost
savings, however, the full benefit of the synergies is expected to be realized in the first quarter of fiscal 2012.
Three-Year Analysis of Sales: By Operating Group and Geography
18
Years Ended
Percent Change
July 2,
% of
July 3,
% of
June 27,
% of
2011 to
2010 to
2011
Total
2010
Total
2009
Total
2010
2009
(Dollars in millions)
Sales by Operating Group:
EM Americas
$
5,113.8
19.3
%
$
3,434.6
17.9
%
$
3,288.3
20.3
%
48.9
%
4.5
%
EM EMEA
4,816.3
18.1
3,651.1
19.0
3,026.5
18.6
31.9
20.6
EM Asia
5,136.1
19.4
3,881.1
20.3
2,878.0
17.7
32.3
34.9
Total EM
15,066.2
56.8
10,966.8
57.2
9,192.8
56.6
37.4
19.3
TS Americas
6,404.7
24.1
4,932.7
25.8
4,283.9
26.4
29.8
15.2
TS EMEA
3,577.1
13.5
2,297.2
12.0
2,241.9
13.8
55.7
2.5
TS Asia
1,486.4
5.6
963.5
5.0
511.3
3.2
54.3
88.4
Total TS
11,468.2
43.2
8,193.4
42.8
7,037.1
43.4
40.0
16.4
Total Avnet, Inc.
$
26,534.4
$
19,160.2
$
16,229.9
38.5
%
18.1
%
Sales by Geographic Area:
Americas
$
11,518.5
43.4
%
$
8,367.3
43.7
%
$
7,572.2
46.7
%
37.7
%
10.5
%
EMEA
8,393.4
31.6
5,948.3
31.0
5,268.4
32.4
41.1
12.9
Asia/Pacific
6,622.5
25.0
4,844.6
25.3
3,389.3
20.9
36.7
42.9
$
26,534.4
$
19,160.2
$
16,229.9