Avnet 2002 Annual Report Download - page 32

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reorganizations, and that the impact of these activities on liquidity and sources and uses of capital will not be
material.
SUMMARY OF SPECIAL CHARGES
(Thousands, except per share amounts)
After-Tax
Pre-Tax After-Tax Per Diluted
Year Quarter Category Charge Charge Share Impact
2002 Q4 Write-down of certain acquired Kent assets $ 29,734 $ 17,974 $(0.15)
Reorganization charges 13,712 8,289 (0.07)
Impairment of Internet investments 36,177 35,821 (0.30)
Total for Year $ 79,623 $ 62,084 $(0.52)
2001 Q4 Kent acquisition and integration costs $157,331 $130,609 $(1.10)
Reorganization charges 127,274 80,302 (0.67)
Impairment of Internet investments 42,880 25,781 (0.22)
Total for Year $327,485 $236,692 $(1.99)
2000 Q3 EBV and SEI Macro integration costs $ 10,120 $ 6,073 $(0.05)
JBA Computer Solutions integration costs 3,146 1,870 (0.02)
Reorganization charges 1,557 934 (0.01)
Q2 Marshall integration costs 18,413 10,951 (0.10)
Reorganization charges 6,918 5,016 (0.05)
Litigation Charges 2,699 1,606 (0.01)
Q1 Reorganization charges 6,111 3,976 (0.04)
Total for Year $ 48,964 $ 30,426 $(0.28)
See also Note 17 to the consolidated Ñnancial statements appearing in Item 14 of this Report for a detail
of activity within the special charge accounts during the past three years.
In the fourth quarter of 2002, the Company recorded a special charge representing a write-down in value
of certain assets acquired in the 2001 acquisition of Kent and certain other charges taken in response to
business conditions. The special charge totaled $79.6 million pre-tax ($21.6 million included in cost of sales
and $58.0 million included in operating expenses) and $62.1 million after tax, or $0.52 per share on a diluted
basis for the fourth quarter and the year.
The Kent-related items resulted from the acquisition of Kent being accounted for using the ""pooling-of-
interests'' method of accounting. Under this method, items that normally would have been reÖected as
adjustments to goodwill as opening balance sheet adjustments if the purchase method of accounting could
have been used were instead recorded to the Company's consolidated statement of operations. These items
amounted to $29.7 million pre-tax and relate primarily to write-downs to the value of receivables considered
uncollectible ($8.2 million), excess and obsolete inventory ($21.6 million) and property, plant and equipment
and non-cancelable lease obligations ($15.9 million) acquired in the Kent acquisition, net of approximately
$16.0 million pre-tax in cash recoveries of certain charges recorded as part of the special charges taken in the
fourth quarter of 2001. The write-downs of Kent-related assets were recorded at the earliest date that
management had suÇcient information to evaluate the recoverability of the assets in order to conclude that a
write-down was necessary to record the assets at their net realizable value.
The remaining pre-tax special charge recorded in the fourth quarter of 2002, amounting to $49.9 million,
includes an impairment charge of $36.2 million pre-tax to write-down certain of the Company's investments in
unconsolidated Internet-related businesses to their fair market value and $13.7 million pre-tax for severance
charges taken for workforce reductions of approximately 850 personnel announced during the fourth quarter.
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