Avnet 2003 Annual Report Download - page 81
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì Continued
The following table summarizes these charges for the past three years, including activity in the related
accrued liability and reserve accounts subsequent to initially recording the charge:
Severance Facility IT-Related Reorganization Acquisition Impairment of
Costs Exit Costs Costs Charges Integration Costs Investments Total
Balance at June 30,
2000ÏÏÏÏÏÏÏÏÏÏÏÏÏ $ Ì $ Ì $ Ì $ Ì $ 8,273 $ Ì $ 8,273
2001 activity ÏÏÏÏÏÏ Ì Ì Ì 127,274 157,331 42,880 327,485
Amounts utilized ÏÏ Ì Ì Ì (108,957) (123,868) (42,880) (275,705)
Balance at June 29,
2001ÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 18,317 41,736 Ì 60,053
2002 activity ÏÏÏÏÏÏ Ì Ì Ì 13,712 29,734 36,177 79,623
Amounts utilized ÏÏ Ì Ì Ì (23,954) (48,836) (36,177) (108,967)
Balance at June 28,
2002ÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì 8,075 22,634 Ì 30,709
2003 activity ÏÏÏÏÏÏ 27,476 38,132 47,762 Ì Ì Ì 113,370
Amounts utilized ÏÏ (22,814) (15,153) (46,199) (7,183) (9,943) Ì (101,292)
Adjustments ÏÏÏÏÏÏ (462) (2,761) (850) Ì (945) Ì (5,018)
Other, principally
foreign currency
translation ÏÏÏÏÏÏ 2,332 2,052 29 Ì 3,349 Ì 7,762
Balance at June 27,
2003ÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 6,532 $ 22,270 $ 742 $ 892 $ 15,095 $ Ì $ 45,531
Total amounts utilized in 2003, 2002 and 2001 consist of cash payments of $45,948,000, $47,043,000 and
$91,681,000, respectively and non-cash write-downs of $55,344,000, $77,961,000 and $184,024,000, respec-
tively. Additionally, 2002 amounts utilized include $16,037,000 in cash recoveries of prior year acquisition
integration costs charges discussed more fully below.
During the second quarter of 2003, the Company executed certain actions as part of its ongoing cost
reduction initiatives and, accordingly, recorded charges totaling $106,765,000 pre-tax, $65,750,000 after tax, or
$0.55 per diluted share. The entire pre-tax charge was included in selling, general and administrative expenses
in the accompanying consolidated statement of operations. The charge consisted of severance costs
($21,700,000 pre-tax), charges related to the consolidation of selected facilities ($37,359,000 pre-tax) and
charges related to certain IT-related initiatives ($47,706,000 pre-tax).
Severance costs and charges related to the consolidation of selected facilities were taken in response to
the current business environment. During the second quarter, management identiÑed a number of facilities in
each of the Company's operating segments and its corporate functions, which covered each of the Company's
geographic regions, to be consolidated into other facilities. The facilities were identiÑed in an eÅort to combine
certain logistics and administrative operations wherever possible and eliminate what would otherwise be
duplicative costs. The charges related to reserves for remaining non-cancelable lease obligations, write-downs
of the carrying value of certain owned facilities to market value and write-downs to fair market value of owned
assets located in these leased and owned facilities that have been vacated. All facilities identiÑed for
consolidation had been vacated by the end of the third quarter of 2003. Workforce reductions at these and
other facilities worldwide resulted in termination of approximately 750 personnel as part of the second quarter
reorganization plan. The impacted personnel were primarily in non-customer facing positions. Also during the
second quarter of Ñscal 2003, management evaluated and elected to discontinue a number of IT-related
initiatives that, in light of recent business restructurings, no longer met the Company's return on investment
standards for continued use or development. These charges relate to the write-oÅ of capitalized hardware,
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