's Customers Performance
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's Comment on Sales, Marketing and Customers
The Company markets its products worldwide primarily through a direct sales staff
and through electronics distributors to a broad range of customers in diverse
industries. Arrow Electronics Inc. (“Arrow”), the Company’s
largest distributor, distributes the Company’s products worldwide. Arrow
is one of the largest distributors of electronic components in the world. Arrow's
global components business segment covers the world's largest electronics markets
- the Americas, EMEA (Europe, Middle East, and Africa), and Asia Pacific regions.
No end customer accounted for more than 10% of the Company’s worldwide net
revenues for any of the periods presented.
The Company’s products typically require a sophisticated technical sales
effort. The Company's sales organization is divided into domestic and international
regions. The Company’s sales offices are located throughout most major metropolitan
areas in the United States. Internationally, the Company has sales offices in
or near: Dortmund, Helsinki, London, Milan, Munich, Paris, Lyon, Stockholm, Oulu,
Stuttgart, Sydney, Melbourne, Beijing, Hong Kong, Tokyo, Nagoya, Osaka, Seoul,
Shanghai, Shenzhen, Chengdu, Xian, Wuhan, Singapore, Taipei, Tel Aviv, Bangalore,
Montreal, Ottawa, Toronto, Calgary, and Vancouver.
The Company has an agreement with one independent sales representative in South
America. Commissions are paid to sales representatives upon shipments either directly
from the Company or through distributors. The Company has agreements with four
independent distributors in North America, five in Europe, two in China, seven
in Japan, three in Taiwan, three in Russia, and one each in Korea, Singapore,
Malaysia, Thailand, India, South Africa, Philippines, Israel, Brazil, Australia,
and New Zealand.
The Company’s agreements with domestic distributors allow for price protection
on certain distribution inventory if the Company lowers the prices of its products.
The Company’s agreements with domestic distributors also allow for stock
rotation privileges (up to 3%-5% of quarterly purchases), which enable distributors
to rotate slow moving inventory. The Company’s sales to international distributors
are made under agreements which permit limited stock return privileges but not
sales price rebates. The agreements generally permit distributors to exchange
up to 5% of eligible purchases on a semi-annual basis. See Critical Accounting
Policies and Note 1 of Notes to Consolidated Financial Statements of this Form
10-K, which contains information regarding the Company’s revenue recognition
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