CUSTOMER SUCCESS STORIES

We give Finance [across the world] access to the hedge recommendations and the underlying data in FiREapps. They either check a box to tell us that they are okay with the data, or, if they spot an incorrect accounting entry from their general ledger, they let us know so that we can make the necessary adjustments to our hedge recommendations.”

AVNET, INC. GLOBAL VISIBILITY AND CENTRALIZED OVERSIGHT IMPROVES EFFECTIVENESS AND LOWERS COSTS

Joe Burke Vice President & Treasurer Avnet, Inc.

“

Avnet provides a vital link in the technology supply chain by connecting the world’s leading manufacturers with more than 100,000 customers globally. Since 1991, the company has completed 80 acquisitions around the world — a growth strategy that consistently yields high value, but at the same time creates a complex and ever-changing operating and systems landscape, and increases exposure to volatility in foreign currencies as the percentage of income generated outside the U.S. continues to rise.

While some companies choose to centralize treasury operations, Avnet believes it is important to keep a local touch. Treasury team members are located in four regional treasury centers (Phoenix, Miami, Brussels, and Hong Kong), where they manage foreign exchange risk, as well as liquidity, cash management, and other types of services at a local level based on Corporate Treasury guidelines.

With a hefty workload and fast-paced change, the ongoing challenge for Joe and his globally distributed team is to continue to evolve and improve Treasury processes, including FX management, to keep pace with the company’s expanding global footprint. “We have multiple instances of SAP and we continuously inherit other ERP systems from companies which we acquire,” Joe explains. “Many of them need to be quickly integrated into our risk management program so we can understand and mitigate the exposures they bring with them.”

Achieving operational excellenceHistorically, Treasury did its best to communicate and distribute policy enterprise-wide, but different entity Accounting groups still had different interpretations of what foreign currency risk was — a problem that manifested itself in their daily Excel submissions to Treasury. To ensure consistent and efficient multi-currency accounting and exposure definition processes in the new FX program, Treasury leverages Avnet’s Operational Excellence Program.

“We get our Operational Excellence team of black belts in process improvement involved with acquisitions and other larger projects,” Joe says. “A lot of it has to do with change management, and a lot of it has to do with making sure everyone is on the same page on things like the definition of foreign currency risk. It helps to work with a partner who is trained in looking at the processes at a high level and mapping them out on ‘swim-lane’ charts. That way, everyone understands what we’re doing and why we’re doing it, which eliminates a lot of the stress and strain that come with fast-paced acquisitions.”

Our acquisition activity gives us the global scale and scope required to meet the needs of our customers and suppliers, who want to go where the growth is in other parts of the world outside the U.S. It also keeps our lean Treasury team very busy, since we are responsible for coordinating and overseeing hedging and other treasury operations for more than 130 entities in the Americas, EMEA, Asia, and Japan.” Joe Burke

Vice President& TreasurerAvnet, Inc.

CHALLENGEIDENTIFYING AND MITIGATING FX EXPOSURE ACROSS MORE THAN 130 ENTITIES — AND COUNTING

Avnet 2001 Rev = $12.8B Avnet 2008 Rev = $18.0B Avnet 2011 Rev = $26.5B

*Excludes corporate expense Amer EMEA Asia Japan

68%28%

4%

Americas OpIncome = 83%

of total*

48%33%

18%1%

Americas OpIncome = 54%

of total*

43%32%

23% 2%

Americas OpIncome = 45%

of total*

Over the past decade, value-creating M&A has dramatically accelerated growth and expanded Avnet’s global revenue and profit pools.

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Industry Fortune 500 distributor of electronic parts, enterprise computing and storage products, and embedded subsystems

Annual Revenues $26 billion

Business Landscape 300+ global locations serving customers in 80+ countries

ERP EnvironmentMultiple instances of SAP, and other ERP systems; SunGard; FXall

FiREapps™ SolutionFiREapps Enterprise — a dynamic, flexible, and scalable cloud-based platform for closed-loop FX exposure analytics, cross-functional collaboration, and hedge program decision support

Company & Case Study Quick Facts

To improve efficiency, predictability, and compliance in its FX management program, Avnet replaced the manual processes and complicated spreadsheets of the past with FiREapps Enterprise. “If you looked at the global footprint for our exposure risk management program a few years ago, before we got together with FiREapps™ and our Operational Excellence team, you’d see a bunch of spreadsheets and telephones — that’s the truth, everything was done manually,” Joe recalls.

Today, the cloud-based FiREapps™ exposure analytics platform interoperates with the company’s ERP, trade execution, and accounting systems, providing Treasury with automated exposure identification, global visibility, and the analytics and tools required for informed, effective risk management at the regional level.

The closed-loop, straight-through processing solution: • Enables consistent exposure definition and calculation management based on data extracted from multiple instances of SAP and other ERP systems.• Can be effectively managed from the four regional treasury centers to support hedging at the frequency needed for each entity (based on factors including size, time since acquisition, and regional business conditions). • Incorporates new businesses and systems quickly and efficiently.

Identifying total exposure from day oneThrough automated and template-based data capture, exposure definition, and validation, FiREapps™ enables Treasury to identify existing exposures and new exposures introduced by recent acquisitions. • On a daily basis, all integrated ERP source data systems generate exposure files based on general ledger totals and securely upload them to FiREapps™ in the cloud. • Other exposure sources, such as newly acquired companies, come into FiREapps™ in one of two ways: 1) by extracting and uploading financial system tables through an automated transform process or 2) by manually uploading exposure data through an Excel spreadsheet.

Exposure data integrity analytics and the ability to dynamically capture new entities and accounts as they are added improve the completeness and accuracy of the information available for analysis. When Avnet adds a new currency or a new account, FiREapps™ dynamically aligns with the new environment, eliminating blind spots and giving Treasury the visibility they need to understand the company’s total exposure at any given point in time.

“On day one, a newly acquired company has the ability to transmit exposures into our FiREapps™ system,” Joe says. “We can combine those new exposures with other exposures for a region, so we have a complete picture right away. There may also be hedges outstanding if they carry over through an acquisition, and we can fold those right into our system as well.”

SOLUTIONA COLLABORATIVE, INTEGRATED, FULL-CIRCLE FX MANAGEMENT PROGRAM THAT LEVERAGED CLOUD-BASED SOFTWARE

Avnet’s integrated, full-circle FX management process leverages multiple data sources and interfaces to help Treasury collaborate across regional FX desks to improve forecast accuracy, identify natural intercompany hedging opportunities, and manage currency actions.

Avnet’s Integrated FX Management Process

Phone: +1.866.928.FIRE (3473) | Fax: +1.928.223.0133www.fireapps.com

Analyzing exposure with global visibilityThe flexible and dynamic FiREapps™ analytics framework empowers the risk management team to understand the potential impact of all currency exposures at any point in time. Files coming into FiREapps™ go through a filtering process based on FAS52/ASC830 rules for revaluation to produce an exposure report, basically mirroring the foreign exchange reevaluation that occurs in the general ledgers of the subsidiaries. “Treasury is the steward of this process in each region on a global basis, so I know that, if it’s Monday in Hong Kong, for example, our Treasury team is running through this process. And then later on in the day in Brussels, the Treasury team is running through the exact same process,” Joe explains. “They’re taking these files, filtering them down into exposure reports, analyzing the exposures, and preparing them for hedge recommendations. We have complete global visibility and the ability to execute quickly.”

Managing exposure with closed-loop straight through processingFiREapps™ decision engines, trade netting, and smart trade recommendations help the regional risk managers work together to lower costs and improve program success.

Treasury uses FiREapps™ to shepherd the exposure management process from end to end, and to collaborate with Finance teams around the world. “We give Finance access to the hedge recommendations and the underlying data in FiREapps™. They either check a box to tell us that they are okay with the data, or, if they spot an incorrect accounting entry from their general ledger, they let us know so that we can make the necessary adjustments to our hedge recommendations.” Once Treasury finalizes the recommendations, they are automatically loaded into FXall, Avnet’s cloud-enabled foreign exchange execution and confirmation solution, and trades are executed based on the best pricing available from the company’s relationship banks. Outstanding hedges are then loaded back into FiREapps™ so they can be prepared for the next hedge hedging cycle.

Together, FXall and FiREapps™ have dramatically reduced hedging transaction costs. Treasury can net all currency pairs on a regional basis, automatically evaluate competitive bids, and go to the bank with one net transaction. FiREapps™ can also separate net transactions out on a gross basis so Treasury can generate an internal trade ticket in Europe between Avnet’s in-house bank and each subsidiary. On a monthly basis, Treasury looks at foreign exchange results and the Other Income line, and compares those numbers to the cost of hedging. This “detective” work helps the team determine what they can do to improve the process going forward.

Both FiREapps™ and FXall are available to all Treasury team members on a global basis. “We have people using the software from all over the world,” Joe says. “Unlike some of the home-grown systems we have developed in the past that had compatibility issues with users from Asia or Belgium, we’ve never had a problem with access to our cloud-enabled solution.” SunGard is currently being used in Europe, and Avnet is evaluating treasury management systems for global use by Treasury and Finance teams.

With the help of the Avnet Operational Excellence team, Treasury established globally consistent exposure risk identification and multi-currency accounting processes that have improved timeliness, accuracy, and controls; enabled cleaner/faster accounting closes, given Treasury more time to discuss the qualitative issues surrounding exposure data; and boosted confidence in the FX exposure management program. Since implementing the new program, Treasury has:• Gained real-time visibility towards exposures and value-at-risk at the entity and enterprise level. • Increased the frequency of exposure management based on Value at Risk to in some cases once a day.• Lowered hedging costs by $75k a month in Europe through organic exposure elimination and reduced transaction volume by aggregating exposures on a regional or corporate basis and hedging the net exposure externally with a financial institution. • Reduced FX gain/loss volatility on a corporate and regional basis.

“The efficiencies we gain from our current solution have enabled us to get more involved in the operational excellence aspect of improving the data that is fed into the system,” Joe says. Informed by accurate and complete data and analytics, regional treasury centers are in constant communication with one another and with corporate Treasury. “There’s always something going on in the acquisition pipeline, so we need to have conversations constantly — from the time a sale and purchase agreement is signed to the time we complete our preparations for the acquisition. Our program makes sure that roles and responsibilities are clearly communicated, that everyone knows what is going to be managed, and that they have the information and the

tools they need to get the job done. And, most importantly, it enables us to integrate newly acquired companies into the Avnet process quickly and efficiently.”

RESULTSGLOBAL VISIBILITY AND CENTRALIZED OVERSIGHT IMPROVES EFFECTIVENESS AND LOWERS COSTS