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Consolidated sales for fiscal 2013 were $25.46 billion , a decrease of 1.0% , or $248.6 million
, from fiscal 2012 consolidated sales of
$25.71 billion . Organic sales decreased 5.3% year over year and declined 4.2%
in constant currency. The organic sales decline was primarily
due to the organic sales decline at TS.
EM sales of $15.09 billion for fiscal 2013 increased 1.1% from fiscal 2012 sales of $14.93 billion
. EM organic sales in constant currency
decreased 1.2%
year over year primarily related to the Americas region, which (i) experienced weaker demand and (ii) exited the lower margin
commercial components business. On a regional basis, the Americas organic sales decreased 10.0%
year over year primarily due to the decision
to exit the lower margin commercial components business. For EMEA, despite the ongoing recessionary trends in the region, organic sales were
relatively flat year over year in constant currency. Asia organic sales increased 6.5%
year over year, which was primarily due to a higher volume
of fulfillment sales in fiscal 2013. The higher growth rate in Asia resulted in a regional shift in the mix of sales between the Asia region and the
western regions, which negatively impacted EM's overall gross profit and operating income margins.
TS sales of $10.36 billion for fiscal 2013 decreased 3.8% from fiscal 2012 sales of $10.77 billion . Organic sales declined 8.3%
year over
year in constant dollars primarily due to weaker sales in the western regions. In the Americas region, year
-over-
year organic sales decreased
8.5% , and organic sales in EMEA decreased 11.7%
in constant currency. On a product level, declines in servers and hardware were partially
offset by growth in storage, services, and software.
Gross Profit and Gross Profit Margins
Consolidated gross profit in fiscal 2014 was $3.23 billion , an increase of $245.9 million , or 8.3%
, from fiscal 2013 and an increase of
2.4% on an organic basis in constant currency. Gross profit margin of 11.7% remained essentially flat, increasing by 3
basis points over the prior
year. EM gross profit margin remained flat year over year primarily related to increases in the western regions being offset by declines in Asia.
The decline in Asia gross margin was primarily due to the effects of a higher volume of fulfillment sales in fiscal 2014. With respect to regional
mix, the Asia region contributed 39.9% of EM sales in fiscal 2014 from 38.0%
in fiscal 2013, attributable to higher growth rates in Asia
including the impact of an increase in fulfillment sales. TS gross profit margin remained flat year over year, with improvements in the EMEA
region being offset by a decline in the Americas.
Consolidated gross profit in fiscal 2013 was $2.98 billion , a decrease of $70.8 million , or 2.3%
, from fiscal 2012. Gross profit margin of
11.7% decreased 17 basis points over fiscal 2012. EM gross profit margin declined 52
basis points year over year primarily related to declines in
gross margins in the EMEA region and a higher mix of sales from the Asia region. The decline in EMEA gross margin was primarily due to the
effects of market pressures associated with relatively short product lead times. With respect to regional mix, the Asia region contributed
38.0%
of EM sales in fiscal 2013 from 33.8%
in fiscal 2012, attributable to higher growth rates in Asia, the effects of the acquisition of Internix, Inc. in
Japan, and lower growth rates in the western regions. TS gross profit margin improved 24
basis points year over year, primarily driven by the
Americas and EMEA regions offset by a decrease in Asia.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A expenses”) were $2.34 billion in fiscal 2014 , an increase of $136.8 million
, or
6.2%
, from fiscal 2013. This increase consisted primarily of an increase of approximately $138.0 million related to expenses from businesses
acquired, and to a lesser extent from an approximately $18.0 million increase related to the translation impact of changes in foreign currency
exchange rates. These increases were partially offset by a decrease related to recent restructuring and cost reduction actions net of SG&A
expense increases related to inflation. In fiscal 2014 , SG&A expenses as a percentage of sales were 8.5%
and as a percentage of gross profit
were 72.6% as compared with 8.7% and 74.0% , respectively, in fiscal 2013
. SG&A expenses as a percentage of gross profit at EM decreased
241
basis points year over year due primarily to the benefits of recent restructuring and cost savings actions and from an increase in gross profit,
partially offset by increases associated with recently acquired businesses that were not fully integrated for the entire fiscal 2014 and the effects of
inflation and other factors. SG&A expenses as a percentage of gross profit at TS decreased 15
basis points from fiscal 2013 due primarily to the
benefits of recent restructuring and costs savings actions and the increase in gross profit, partially offset by the increases associated with recently
acquired businesses and the effects of inflation and other factors.
SG&A expenses were $2.20 billion in fiscal 2013 , an increase of $111.5 million , or 5.3%
, from fiscal 2012. This increase consisted of an
increase of approximately $184.4 million related to expenses from businesses acquired and the effects of inflation and other factors, which
increased the Company's SG&A expenses by an estimated $61.0 million. These increases were partially offset by a decrease of approximately
$100.0 million related to recent restructuring and cost reduction actions and a decrease of approximately $33.9 million related to the translation
impact of changes in foreign currency exchange rates. In fiscal 2013 , SG&A expenses as a percentage of sales were 8.7%
and as a percentage of
gross profit were 74.0% as compared with 8.1% and 68.6% , respectively, in fiscal 2012
. SG&A expenses as a percentage of gross profit at EM
increased 522
basis points year over year, primarily due to the effects of recent acquisitions as the related cost savings had not yet been fully
attained and due to declines in
22