Avnet 2006 Annual Report Download - page 12

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As a global technology sales and marketing organization, TS has dedicated sales and marketing divisions
focused on specific customer segments including OEMs, independent software vendors, system builders,
system integrators, and VARs. TS's select line card strategy enables an exceptional level of attention to the
needs of its suppliers.
TS consists of the following primary divisions:
‚ Avnet Partner Solutions is a global value-added distributor of enterprise computing systems, software,
storage, complex technology solutions and services. It is one of the industry's leading value-added
distributors in the enterprise computing space in support of a select line card of the foremost systems,
storage and software manufacturers. Avnet Partner Solutions provides those manufacturers' products
to VARs, along with complementary value-added services. Avnet Partner Solutions also provides
logistics, financial, marketing, sales and technical services, including in-house engineering support,
complex systems integration and configuration services. Besides locations in North America, Avnet
Partner Solutions operates in Australia, Austria, Belgium, the Czech Republic, Germany, Hungary,
Italy, Poland, Slovakia, Switzerland and the United Kingdom.
‚ Avnet Computing Components serves the needs of manufacturers of general-purpose computers and
system builders by providing them with the latest technologies such as microprocessors, DRAM
modules and motherboards. Avnet Computing Components does business in all three of the major
economic regions: Americas, EMEA and Asia.
‚ Avnet Applied Computing Solutions focuses on the unique needs of non-PC OEMs and system
builders/integrators. It provides technical design, integration and assembly to developers of application
specific computer solutions in the non-PC marketplace. Examples of these types of customers are
OEMs in the medical, telecommunications, industrial control and digital creation market segments.
Avnet Applied Computing Solutions does business in all three of the major economic regions.
‚ Avnet Visual and Data Solutions concentrates on specialized video and display products, network
products and storage solutions, while targeting primarily VARs and system integrators with its wireless
switch and wireless stand-alone solutions. Avnet Visual and Data Solutions does business in eight
European countries.
Foreign Operations
As noted in the operating group discussions, Avnet has significant operations in all three major economic
regions of the world: the Americas, EMEA, and Asia. Historically, Avnet's operations in the Americas region
(primarily the United States) have contributed the largest percentage of consolidated sales. For fiscal 2006,
2005 and 2004, the percentage of the Company's sales in the Americas has been 51%, 52% and 53%,
respectively. The EMEA region's contribution to Avnet's consolidated sales has been 31%, 33% and 33%,
respectively, for fiscal 2006, 2005 and 2004. The Asia region has seen continuous growth representing 18%,
15% and 14%, respectively, of consolidated sales for fiscal 2006, 2005 and 2004. This growth in Asia is
indicative of a worldwide industry trend and is a result of Avnet's continued investment into this rapidly
growing region, particularly in the Peoples' Republic of China. Management expects the Asia region to
continue to grow, both in volume of business and as a percentage of the Company's global business in the
future, although the rate of growth may not remain at the same robust percentages exhibited in the past three
to four years.
Avnet's foreign operations are subject to a variety of risks including potential restrictions on transfers of
funds due to statutory or tax regulations, foreign currency fluctuations, import and export duties and
regulations, changing foreign tax laws and regulations, potential military conflicts, less flexible employee
contracts in the event of business downturns, and the burden and cost of compliance with foreign laws. The
most common of these risks is the Company's exposure to foreign currency fluctuations, which are hedged
regularly as part of Avnet's treasury and cash management operations. These risks are discussed further under
Risk Factors in Item 1A and under Quantitative and Qualitative Disclosures About Market Risk in Item 7A of
this Report. Additionally, the specific translation impacts of foreign currency fluctuations, most notably the
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