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Table of Contents
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
For an understanding of Avnet and the significant factors that influenced the Company’
s performance during the past three fiscal years, the
following discussion should be read in conjunction with the description of the business appearing in Item 1 of this Report and the consolidated
financial statements, including the related notes and schedule, and other information appearing in Item 15 of this Report. The Company operates
on a “52/53 week” fiscal year. Fiscal 2013 , 2012 and 2011 all contained 52 weeks.
There are references to the impact of foreign currency translation in the discussion of the Company’
s results of operations. When the
stronger U.S. Dollar exchange rates of the current year are used to translate the results of operations of Avnet’
s subsidiaries denominated in
foreign currencies, the resulting impact is a decrease in U.S. Dollars of reported results as compared with the prior period. When the U.S. Dollar
weakens, the resulting impact is an increase in U.S. Dollars of reported results as compared with the prior period. In the discussion that follows,
this is referred to as the “translation impact of changes in foreign currency exchange rates.”
In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”
),
the Company also discloses certain non-GAAP financial information, including:
Management believes that providing this additional information is useful for the reader to better assess and understand operating
performance, especially when comparing results with previous periods or forecasting performance for future periods. Furthermore, management
typically monitors the business both including and excluding these items and uses these non-
GAAP measures to establish operational goals and,
in some cases, for measuring performance for compensation purposes. However, analysis of results and outlook on a non-
GAAP basis should be
used as a complement to, and in conjunction with, data presented in accordance with GAAP.
Results of Operations
Executive Summary
Revenue for fiscal 2013 was $25.46 billion , a decrease of 1.0% from fiscal 2012 revenue of $25.71 billion
, and revenue on an organic
basis was down 5.3%
year over year. This decrease in revenue reflects weakness in the western regions at both operating groups due primarily to
the global macroeconomic environment, partially offset by strength in Asia. EM revenue of $15.09 billion increased 1.1%
over the prior year and
organic revenue decreased 1.2%
year over year in constant currency. This decrease in organic revenue was primarily related to the Americas
region, which (i) experienced weaker demand and (ii) exited the lower margin commercial components business. TS revenue of
$10.36 billion
decreased 3.8% over the prior year and its organic revenue decreased 8.3%
in constant currency over the prior year. This decrease in organic
revenue was also attributable to weakness in the western regions.
17
•
Income or expense items as adjusted for the translation impact of changes in foreign currency exchange rates, as discussed above.
• Sales adjusted for certain items that impact the year-over-year analysis, which included the impact of acquisitions by adjusting Avnet’
s
prior periods to include the sales of businesses acquired as if the acquisitions had occurred at the beginning of the period presented. In
addition, the prior year sales are adjusted for (i) two divestitures by adjusting Avnet’
s prior periods to exclude the sales of the business
divested as if the divestiture had occurred at the beginning of the period presented, and (ii) the transfer of the existing commercial
components business from TS Americas to EM Americas that occurred in the first quarter of fiscal 2012 and the transfer of another
business unit from TS Americas to EM Americas that was completed at the beginning of fiscal 2013. Sales taking into account the
combination of these adjustments are referred to as “organic sales.”
• Operating income excluding restructuring, integration and other charges incurred in fiscal 2013 , 2012 and 2011
. The reconciliation to
GAAP is presented in the following table:
Years Ended
June 29,
2013
June 30,
2012
July 2,
2011
(Thousands)
GAAP operating income
$
625,981
$
884,165
$
929,979
Restructuring, integration and other
149,501
73,585
77,176
Adjusted operating income
$
775,482
$
957,750
$
1,007,155