Avnet 2005 Annual Report Download - page 77

AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
17. Restructuring and other charges
During fiscal 2004 and 2003, 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, generally taken in response to business conditions at the time of the
charge and as part of the efforts of the Company to return to the profitability levels enjoyed by the business
prior to the industry and economic downturn that commenced in fiscal 2001. 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
Costs Exit Costs Costs Other Total
Balance at June 28, 2002ÏÏÏÏÏÏÏÏÏÏ $ 6,770 $ 21,027 $ Ì $ 2,912 $ 30,709
2003 activity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27,476 38,132 47,762 Ì 113,370
Amounts utilizedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (28,882) (24,891) (46,199) (1,320) (101,292)
AdjustmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (462) (2,761) (850) (945) (5,018)
Other, principally foreign currency
translation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,332 5,401 29 Ì 7,762
Balance at June 27, 2003ÏÏÏÏÏÏÏÏÏÏ 7,234 36,908 742 647 45,531
2004 activity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14,691 15,643 19,759 5,525 55,618
Amounts utilizedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (18,235) (32,411) (19,351) (5,624) (75,621)
AdjustmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,043) 1,164 (210) Ì (89)
Other, principally foreign currency
translation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 381 1,041 (68) Ì 1,354
Balance at July 3, 2004 ÏÏÏÏÏÏÏÏÏÏÏ 3,028 22,345 872 548 26,793
Amounts utilizedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,285) (11,161) (722) (207) (13,375)
AdjustmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (350) (952) (18) Ì (1,320)
Other, principally foreign currency
translation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26 245 (21) 10 260
Balance at July 2, 2005 ÏÏÏÏÏÏÏÏÏÏÏ $ 1,419 $ 10,477 $ 111 $ 351 $ 12,358
Total amounts utilized in fiscal 2005, 2004 and 2003 consist of cash payments of $13,375,000,
$44,212,000 and $45,948,000, respectively and non-cash write-downs of $31,409,000 and $55,344,000, in fiscal
2004 and 2003, respectively.
As part of management's ongoing analysis of its restructuring reserves, the Company recorded certain
adjustments to reserves totaling $1,320,000 during fiscal 2005, which were recorded through selling, general
and administrative expenses. The adjustments related primarily to the reversal of certain excess legal expense
reserves associated with finalization of termination payments and reversal of excess severance reserves offset
in part by additional severance costs recorded based upon revised estimates of required payouts. The Company
also reduced certain lease reserves due to modification to sublease and termination assumptions based upon
ongoing market conditions.
During the first and second quarters of fiscal 2004, the Company executed certain restructuring and cost
cutting initiatives in order to improve profitability. These actions can generally be broken into three categories:
(1) the combination of the CM and AC operating groups into one computer products and services business
(see Note 16); (2) the reorganization of the Company's global IT resources, which had previously been
administered generally on a separate basis within each of the Company's operating groups; and (3) various
other reductions within EM and certain centralized support functions.
69