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Avnet Analyst Day 2010
Performance & Potential
Avnet, Inc.
December 15, 2010
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Opening Remarks and Management
Introductions
Vince Keenan
Vice President, Investor Relations
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December 2010 Avnet Analyst Day Agenda
9:30 am Check-in
10:00 am Welcome & Introductions Vince Keenan
Performance & Potential Roy Vallee
Operational Update Rick Hamada
Financial Update Ray Sadowski
12:00 pm Buffet Lunch
1:00 pm Technology Solutions Phil Gallagher
Electronics Marketing Harley Feldberg
Wrap up Roy Vallee
2:45 pm Conclude
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Safe Harbor Statement
• This presentation contains certain “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements are based on management’s current expectations and are subject to
uncertainty and changes in factual circumstances. The forward-looking statements herein
include statements addressing future financial and operating results of Avnet and may include
words such as “will,” “anticipate,” “expect,” “believe,” and “should” and other words and terms
of similar meaning in connection with any discussions of future operating or financial
performance or business prospects. Actual results may vary materially from the expectations
contained in the forward-looking statements.
• The following factors, among others, could cause actual results to differ materially from those
described in the forward-looking statements: the Company’s ability to retain and grow market
share and to generate additional cash flow, risks associated with any acquisition activities and
the successful integration of acquired companies, any significant and unanticipated sales
decline, changes in business conditions and the economy in general, changes in market
demand and pricing pressures, any material changes in the allocation of product or product
rebates by suppliers, allocations of products by suppliers, other competitive and/or regulatory
factors affecting the businesses of Avnet generally.
• More detailed information about these and other factors is set forth in Avnet’s filings with the
Securities and Exchange Commission, including the Company’s reports on Form 10-K, Form
10-Q and Form 8-K. Avnet is under no obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
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Adaptability
Financial Conservatism
Culture
Profitable Growth
Leadership
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• Gross Profit $ Volume
• ROCE
• Market Capitalization
TECHNOLOGY DISTRIBUTION
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Steve Phillips
Chief Information Officer
Avnet, Inc.
5 Years of Service
MaryAnn Miller
Chief Human Resources Officer
Avnet, Inc.
4 Years of Service
David Birk
Senior Vice President and General Counsel
Avnet, Inc.
30 Years of Service
Al Maag
Chief Communications Officer
Avnet, Inc.
13 Years of Service
Jim Smith
President
Avnet Logistics
10 Years of Service
Steve Church
Chief Business Development and Process Officer
Avnet, Inc.
20 Years of Service
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Harley Feldberg
President,
Avnet Electronics Marketing
28 Years of Service
Rick Hamada
President and Chief Operating Officer
Avnet, Inc.
27 Years of Service
Ray Sadowski
Chief Financial Officer
Avnet, Inc.
32 Years of Service
Phil Gallagher
President,
Avnet Technology Solutions
28 Years of Service
Roy Vallee
Chairman & Chief Executive Officer
Avnet, Inc.
33 Years of Service
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90 Years in Business
+
50 Years on NYSE
+
148 Years of Sr. Leadership
AVNET’S LONGEVITY
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Macro Environment
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What a Difference a Year Two Years Make…
• Avnet’s served available market (SAM) grew faster than
initially forecasted
• Most volatile 2 year period for semiconductor growth
• Concerns of a double-dip have been receding as the global
economy continues to grow
• Remain in a gradual cyclical recovery
Sources: Bishop, Electronics Outlook, Fleck, Gartner, IDC, iSuppli (Rev: 11/2010)
2009 2010
Actual Dec 09 Forecast Dec 10 Projection
EM SAM -15% 9% 22%
TS SAM -5% 4% 3%
AVT SAM -7% 5% 7%
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Recession’s Impact on Semiconductors
0
50
100
150
200
250
300
350
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
($ B
illio
ns)
Growth Decline
Source: SIA/WSTS (total semiconductors)
32%
Growth
2009-
2010
First time there has been two consecutive years of declineFirst year of recovery more dramaticV-shape recovery drove new industry record
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36.7%
42.6%41.6%
29.2%
2.6%
-24.1%
-39.2%-42.3%
-31.8%
-4.9%
17.3%
19.4%
22.0%
12.9% 11.9%
25.3%
28.7%
35.1%
30.7%
14.2%11.8%
0.3%3.3%
8.9%
7.4%
11.6%9.1%
5.4%
1.8%-0.4%
6.1%
9.5%
8.7%
12.1%
9.3%
-15.0%
-29.2%
-18.8%
-12.8%
15.7%
48.4%
31.7%
22.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Mar-
00
Jun-0
0
Sep-0
0
Dec-0
0
Mar-
01
Jun-0
1
Sep-0
1
Dec-0
1
Mar-
02
Jun-0
2
Sep-0
2
Dec-0
2
Mar-
03
Jun-0
3
Sep-0
3
Dec-0
3
Mar-
04
Jun-0
4
Sep-0
4
Dec-0
4
Mar-
05
Jun-0
5
Sep-0
5
Dec-0
5
Mar-
06
Jun-0
6
Sep-0
6
Dec-0
6
Mar-
07
Jun-0
7
Sep-0
7
Dec-0
7
Mar-
08
Jun-0
8
Sep-0
8
Dec-0
8
Mar-
09
Jun-0
9
Sep-0
9
Dec-0
9
Mar-
10
Jun-1
0
Sep-1
0
Global Semi less DRAM, MPU & Flash
Source: WSTSSource: WSTSSource: WSTS
Semiconductor Y/Y Growth Rates
Two 100 year floods
in a decade
RecessionRecession
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22.0%
12.9%11.9%
25.3%
28.7%
35.1%
30.7%
14.2%
11.8%
0.3%
3.3%
8.9%7.4%
11.6%9.1%
5.4%
1.8%
-0.4%
6.1%
9.5%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Mar-
03
Jun-0
3
Sep-0
3
Dec-0
3
Mar-
04
Jun-0
4
Sep-0
4
Dec-0
4
Mar-
05
Jun-0
5
Sep-0
5
Dec-0
5
Mar-
06
Jun-0
6
Sep-0
6
Dec-0
6
Mar-
07
Jun-0
7
Sep-0
7
Dec-0
7
SSSS
Semiconductor Y/Y Growth Rates
Excluding the recessions, the worst quarters in this
period were roughly flat year-over-year
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22.0%
12.9%11.9%
25.3%
28.7%
35.1%
30.7%
14.2%
11.8%
0.3%
3.3%
8.9%7.4%
11.6%9.1%
5.4%
1.8%
-0.4%
6.1%
9.5%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
Mar-
03
Jun-0
3
Sep-0
3
Dec-0
3
Mar-
04
Jun-0
4
Sep-0
4
Dec-0
4
Mar-
05
Jun-0
5
Sep-0
5
Dec-0
5
Mar-
06
Jun-0
6
Sep-0
6
Dec-0
6
Mar-
07
Jun-0
7
Sep-0
7
Dec-0
7
SSSS
18%
27%
6%8%
4%
2003 2004 2005 2006 2007
Semiconductor Y/Y Growth Rates
Resulting in 5 years of uninterrupted growth
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Projected Semiconductor Growth
0
50
100
150
200
250
300
350
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
($ B
illi
on
s)
Growth Decline Source: SIA/WSTS (total semiconductors)
Current forecasts project at least four years of growth
Total 2011-2013 $ growth is greater than pre-recession
2005 - 2007
+43 Billion
2011 - 2013
+47 Billion
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Projected Semiconductor Growth Rates
0
50
100
150
200
250
300
350
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
($ B
illi
on
s)
Growth Decline
10-year CAGR +14.9%
10-year CAGR +3.8%
Source: SIA/WSTS (total semiconductors)
Next decade, two 100 year floods impacted semi CAGR
However, recession only interrupted semi market growth
90s growth driven by business spend
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Recession’s Impact on IT Spend
Less volatile than the semiconductor industryProjections reflect resumption of consistent growth
1 year decline versus 2 years
Source: IDC (All Hardware, Software and Services) - 10/2010
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010E
2011E
2012E
2013E
($ B
illio
ns)
Growth Decline
2011 - 2013
+273 Billion2006 - 2008
+257 Billion
Total $ growth is greater post-recession
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GDP Growth Versus Total IT Spend
IT Spend grew 6.5%
2.1x GDP
IT Spend projected to grow 5.7%
1.6x GDP
3 yrs leading into the recession 3 yrs leading out of the recession
Hardware growth rate higher post recession
Avnet Technology Solutions is ~70% Hardware
Source - IDC - Oct 2010; GDP - IMF Oct 2010
3.2%
5.9% 6.4%
8.0%
0%
2%
4%
6%
8%
GDP Hardware Services Software
2005-2008 CAGR
1.9x2.0x
2.5x
3.6%
6.6%
4.3%
6.2%
0%
2%
4%
6%
8%
GDP Hardware Services Software
2010-2013 CAGR
1.9x
1.2x
1.7x
Served Available
Market
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$225
$274$291
$313$331
0
50
100
150
200
250
300
350
2009 2010 2011 2012 2013
US
$ B
illio
n
Sources: Bishop, Electronics Outlook, Fleck, Gartner, iSuppli (Rev: 11/2010)
Total Growth
2011-2013 +$58B
EM SAM – Continued Growth Following Record
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$914 $946$984
$1,034$1,087
0
300
600
900
1,200
2009 2010 2011 2012 2013
US
$B
illio
ns
Source: IDC, Gartner, iSuppli (rev. 11/2010)
Total Growth
2011-2013 +$141B
TS SAM – Steady Growth Toward One Trillion
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Large Market That is Leading the Recovery
-15% 22% 6% 8% 6%
-5%3%
4%5%
5%
0
250
500
750
1,000
1,250
1,500
2009 2010 2011 2012 2013
($ b
illi
on
s)
Total Component TAM w/o MPUs, DRAMs, or Flash Total Computer TAM w/ Professional Services
$1,446B
5%
$1,149B
-7%
Note: Percentages represent sequential growth rates. Sources: Bishop, Electronics Outlook, Fleck, Gartner, IDC, iSuppli (Rev: 11/2010)
$1,366B
6%$1,278B
5%$1,205B
7%
Avnet Total Served Available Market
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Avnet’s Global Growth Opportunity
27
*Avnet’s FY11 revenue is an estimate based upon Q1FY11 annualized excluding Prosys
Total TAM $1,275 B
Direct TAM
~$956B
DistributorTAM ~$319B
Direct TAM
~$956B
DistributorTAM ~$319B
Avnet
~$24.2 Billion*
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Avnet’s Vision Statement
Avnet
will deliver
the highest value
to our customers, suppliers,
employees and shareholders
as the premier technology marketing,
distribution and services company, globally
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Business Segment Overview
• Markets and distributes electronic components and embedded systems to OEMs, ODMs and EMS providers
– Products include semiconductors, interconnect, passive, electromechanical and subsystems
– Value-added services spanning the design and supply chains globally including substantial product enhancement
• Markets and distributes complex computer products to VARs, systems builders and OEMs
– Products include enterprise servers, storage systems, embedded subsystems, networking software and services
– Value-added services including marketing, tech support, configuration, integration, training and financial
1 Excludes corporate expenses, restructuring, integration and other charges 2 Working capital = Trade Receivables + Inventory - Payables
28%
72%
43%57%
34%66%
TS
EM
TS
EM
TS
EM
FY 2010 Revenue FY 2010 EBIT1 10/2/10 Working Capital2
Technology Solutions (TS)Electronics Marketing (EM)
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$18.0
$16.2
$19.2
$24.2
$10.0
$12.5
$15.0
$17.5
$20.0
$22.5
$25.0
FY 2008 FY 2009 FY 2010 Q1FY11 Q1FY11 Annualized*
Re
ve
nu
e U
S$
Bill
ions
30
Emerged from Recession a Much Stronger Company
* Excludes ProSys
-$1.8B
+$1.1B
Acquired 3
companies that
add ~$4B of
revenue and
achieve 12.5%
ROCE with no
add’l debt or
equity capital
+$3B
-$30M
Revenue:
Cash from Ops:
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Avnet – Global Leader in Technology Distribution
Gross Profit Dollar Volume
Return on Capital Employed (ROCE)
Market Capitalization
• VBM culture improving performance through the cycles
• Exited this downturn a much stronger company
– Setting quarterly records for revenue, EPS and ROCE
– More diversified revenue stream with significant growth opportunities
– Experienced management team with proven, consistent performance
• Served market >$1.2 trillion and growing much faster than GDP
• Avnet is growing much faster than the market
– Organic and value creating M&A
Q&A