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Sales during the year ended June 30, 2006 were negatively impacted by foreign exchange fluctuations of $7.4 million. Without the foreign exchange fluctuations, the
increase for the year would have been 33.7% or $58.3 million. Although management cannot forecast the future direction of foreign exchange rate movements, if
significant unfavorable changes in exchange rates occur, net sales of the segment could be adversely affected.
Gross Profit
The following table summarizes the Company’s gross profit:
Percentage of Net Sales
2006 2005 Difference Change 2006 2005
(In thousands)
North American distribution $138,168 $130,411 $ 7,757 5.9% 9.6% 10.1%
International distribution 30,184 19,315 10,869 56.3% 13.5% 11.2%
Gross Profit $168,352 $149,726 $18,626 12.4% 10.1% 10.2%
North American Distribution
Gross profit for the North American distribution segment increased $7.8 million for the fiscal year ended June 30, 2006 as compared to the prior fiscal year. The
increase in gross profit for the year ended June 30, 2006 is a result of increased sales volume of the segment.
Gross profit as a percentage of net sales for the North American distribution segment decreased to 9.6% of sales for fiscal year 2006 as compared to 10.1% of sales
for the prior fiscal year. The decrease from the prior year is due to a greater percentage of orders to larger resellers who have a lower value-add requirement, and to
changes in vendor purchasing programs, which had the effect of increasing unit costs. The change in vendor purchasing programs is a combination of decreased
program benefits and higher year on year sales volume with fixed dollar incentives on certain programs.
International Distribution
Gross profit for the international distribution segment increased $10.9 million for the fiscal year ended June 30, 2006 as compared to the prior fiscal year. The
increase was primarily due to increased volume, and increased volume related benefits of vendor programs in the current year.
Gross profit, as a percentage of net sales, which is typically greater than the North American distribution segment, increased over the prior year. Gross margin
increased due to the mix of sales to large resellers with lower value-add requirements, which was higher in the prior year, primarily in Europe, and to the volume related
benefits of vendor programs in the current year.
Operating Expenses
The following table summarizes the Company’s operating expenses:
Percentage of Net Sales
2006 2005 Difference Change 2006 2005
(In thousands)
Fiscal year ended $105,042 $90,970 $14,072 15.5% 6.3% 6.2%
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