Ingram Micro 2000 Annual Report Download - page 47

.4 0 |INGRAM MICRO
N o t e 3 — R e o r g a n i z a t i o n c o s t s
During 1999,the Company initiated a reorganization plan primarily in the U.S., but also in Europe to streamline certain oper-
ations and strengthen operational efficiencies. In connection with this reorganization plan,the Company recorded a charge of
$20,305 for the fiscal year ended January 1,2000.The 1999 reorganization charge included employee termination benefits for
approximately 597 employees; a write-off of software used in the production of unbranded systems; costs of closing and consolidat-
ing redundant facilities which related primarily to excess lease costs net of estimated sublease income;and other costs associated
with the reorganization.These initiatives were substantially completed at January 1, 2000 and related costs have been substantially
paid and charged against the liability, without significant adjustment.
The payment activities in 2000 and 1999 are summarized as follows:
O u t s t a n d i n g Amounts Pa i d
Liability at and Charg e d Re m a i n i n g
Beginning of Re o rg a n i zation Against the Liability at
2000 Period Charge Liability End of Period
E m p l o yee te r m i n ation benef i t s $ 1,708 $ — $ (1,269) $ 4 3 9
Facility co s t s 612 — (612) —
Tot a l 2, 3 2 0 — ( 1, 8 8 1 ) 4 3 9
1999
E m p l o yee te r m i n ation benef i t s $ — $ 1 2, 3 2 2 $ (10,614) $ 1, 7 0 8
S oft wa re co s t s — 6,381 (6,381) —
Facility co s t s — 1,284 (672) 612
Other co s t s — 318 (318) —
Tot a l — 2 0,305 ( 1 7, 9 8 5 ) 2, 3 2 0
N o t e 4 — A c q u i s i t i o n s
In January 1999, the Company purchased 44,114,340 shares of the common stock of Ingram Micro Asia Ltd.(formerly known
as Electronic Resources Ltd.,“ERL”) from certain shareholders,which increased the Company’s ownership to 39.6% from the 21%
ownership held in 1998. In accordance with Singapore law, the Company was required to extend a tender offer for the remaining
shares and warrants of ERL as a result of its increased ownership.The Company offered to purchase the remaining outstanding
shares and warrants for approximately $1.20 and $0.65 per share and warrant, respectively, during the tender offer period from
January 4, 1999 to February 19, 1999.In addition, during January and February 1999, the Company made open market purchases
of ERL shares and warrants. As a result of the open market purchases and the tender offer, the Company’s ownership in ERL
increased to approximately 95%. In the third quarter of 1999, the Company commenced a take-over offer for the remaining ERL
shares and warrants not already owned by Ingram Micro. As a result of the takeover, the Company purchased an additional
12,151,748 shares and 1,337,962 warrants of ERL, increasing the Company’s ownership position to 100% of the outstanding
shares of ERL and approximately 99% of the outstanding warrants.The aggregate purchase price paid during 1999 for these ERL
shares and warrants, net of cash acquired, was approximately $237,396.
Prior to 1999, the Company accounted for its investment in ERL,which totaled approximately $71,212,under the equity
method. Due to the purchase of ERL common stock and warrants in 1999, the Company has consolidated the results of ERL.The
Company accounted for the acquisition of ERL under the purchase method;accordingly, the results of ERL’s operations have been
combined with those of the Company commencing with the year ended January 1, 2000.The purchase price was allocated to the
assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition.The excess of the purchase
price, including the $71,212 paid in December 1997, over the net assets acquired was approximately $240,506 and is being amor-
tized on a straight-line basis over 30 years.
N o tes to co n s o l i d a ted financial st a t e m e n ts ]c o n t i nu e d
Dollars in 000s,except per share data