Avnet 2006 Annual Report Download - page 88

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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
The severance costs related primarily to severance and other termination benefit payments related to 20
personnel in the TS Americas' operations who were rendered redundant in Avnet's ongoing business following
the divestiture of the end-user business lines during the third quarter of fiscal 2006. This included two
management-level employees whose primary responsibilities previously included the management of the
divested business lines. Severance charges in fiscal 2006 also included termination benefits for over 10
personnel in the TS EMEA operations who were identified as redundant based upon the realignment of
certain job functions in that region and two corporate management-level employees. The facility exit charges
related to liabilities for remaining non-cancelable lease obligations and the write-down of facility-related
property, plant and equipment. The impacted facilities were TS leased facilities in the Americas that were
rendered redundant with the divestitures discussed above, as well as certain TS leased facilities in EMEA that
were vacated as part of the realignments of personnel discussed above. Certain furniture, fixtures and
equipment in these facilities were also written off as part of these charges. Other charges in fiscal 2006 related
primarily to asset impairment charges recorded in the second quarter and fourth quarter of fiscal 2006 totaling
$3,591,000 for two owned but vacant facilities and certain related fixed assets Ì one in EMEA and one in the
Americas. The write-down to fair value was based upon management's estimates of the current market values
and possible selling price, net of selling costs, for these properties. Also included in other charges is the
pension plan curtailment charge and environmental liability charge noted previously.
Of the $16,504,000 recorded to expense for these non-Memec related restructuring and other charges
during fiscal 2006, $3,299,000 represented non-cash asset write-downs, which consisted primarily of the write-
down to fair value of the owned facilities in EMEA and the Americas and certain furniture, fixtures and
equipment in leased facilities. The remaining charges in fiscal 2006, amounting to $13,205,000, required or
will require the use of cash, of which $5,109,000 was paid during fiscal 2006.
As of July 1, 2006, remaining reserves related to these non-Memec related restructuring and other actions
taken in fiscal 2006, included in the table above, totaled $6,350,000 of which $3,972,000 relates to severance
reserves, the majority of which management expects to utilize before the end of fiscal 2008, facility exit costs
of $2,281,000, the majority of which management expects to utilize by fiscal 2013, and other costs of $97,000,
the majority of which management expects to utilize by the end of fiscal 2007.
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