Avnet 2004 Annual Report Download - page 70

AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
The Company manages its business based upon the operating results of its two operating groups before
restructuring and other charges (see Note 17). In each of the three years presented above, approximate
unallocated pre-tax restructuring and other charges related to EM and TS, respectively, were: $19,446,000 and
$29,920,000 in Ñscal 2004; $84,238,000 and $21,315,000 in Ñscal 2003; and $12,811,000 and $32,527,000 in
Ñscal 2002. The remaining restructuring and other charges in each year relate to corporate activities.
Beginning in Ñscal 2003, the Company has allocated its goodwill remaining after the transition
impairment charge recorded in accordance with the adoption of SFAS 142 (see Note 6) to the applicable unit
level in order to better evaluate and measure performance of its unit and segment operations. Asset balances
by group and by geography in Ñscal 2002 have been reclassiÑed to present this prior year on a consistent basis.
17. Restructuring and Other Charges:
Over the course of the past three years, the Company recorded a number of restructuring and integration
charges which generally related either to the reorganization of operations in each of the three major regions of
the world in which the Company operates, charges stemming from the acquisition and integration of newly
acquired businesses. During that period, the Company has also recorded other charges, generally taken in
response to business conditions at the time of the charge, including impairments recorded to certain of its
Internet-related investments. 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 Impairment of
Costs Exit Costs Costs Other Investments Total
Balance at June 29, 2001ÏÏÏÏ $ 20,266 $ 26,631 $ Ì $ 13,156 $ Ì $ 60,053
2002 activityÏÏÏÏÏÏÏÏÏÏÏÏÏ 13,712 15,863 Ì 13,871 36,177 79,623
Amounts utilized ÏÏÏÏÏÏÏÏÏ (27,208) (21,467) Ì (24,115) (36,177) (108,967)
Balance at June 28, 2002ÏÏÏÏ 6,770 21,027 Ì 2,912 Ì 30,709
2003 activityÏÏÏÏÏÏÏÏÏÏÏÏÏ 27,476 38,132 47,762 Ì Ì 113,370
Amounts utilized ÏÏÏÏÏÏÏÏÏ (28,882) (24,891) (46,199) (1,320) Ì (101,292)
Adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏ (462) (2,761) (850) (945) Ì (5,018)
Other, principally foreign
currency translationÏÏÏÏÏ 2,332 5,401 29 Ì Ì 7,762
Balance at June 27, 2003ÏÏÏÏ 7,234 36,908 742 647 Ì 45,531
2004 activityÏÏÏÏÏÏÏÏÏÏÏÏÏ 14,691 15,643 19,759 5,525 Ì 55,618
Amounts utilized ÏÏÏÏÏÏÏÏÏ (18,235) (32,411) (19,351) (5,624) Ì (75,621)
Adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,043) 1,164 (210) Ì Ì (89)
Other, principally foreign
currency translationÏÏÏÏÏ 381 1,041 (68) Ì Ì 1,354
Balance at July 3, 2004 ÏÏÏÏ $ 3,028 $ 22,345 $ 872 $ 548 $ Ì $ 26,793
Total amounts utilized in Ñscal 2004, 2003 and 2002 consist of cash payments of $44,212,000,
$45,948,000 and $47,043,000, respectively and non-cash write-downs of $31,409,000, $55,344,000 and
$77,961,000, respectively. Additionally, Ñscal 2002 amounts utilized include $16,037,000 in cash recoveries of
prior year acquisition integration costs discussed more fully below.
During the Ñrst and second quarters of Ñscal 2004, the Company executed certain restructuring and cost
reduction initiatives designed to continue improving the proÑtability of the Company. These actions can
generally be broken into three categories: (1) the combination of CM and AC as discussed in Note 16;
(2) the reorganization of the Company's global IT resources, which had previously been administered
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