Avnet 2009 Annual Report Download - page 26

Table of Contents
groups with employee reductions of approximately 1,400 in EM, 400 in TS and the remaining from centralized
support functions. Exit costs for vacated facilities related to 29 facilities in the Americas, 13 in EMEA and three in
Asia/Pac and consisted of reserves for remaining lease liabilities and the write-down of leasehold improvements and
other fixed assets. The total amounts utilized during fiscal 2009 consisted of $36.2 million in cash payments and
$0.7 million for the non-cash write downs of assets. As of June 27, 2009, management expects the majority of the
remaining severance reserves to be utilized by the end of fiscal 2010, the remaining facility exit cost reserves to be
utilized by the end of fiscal 2014 and other contractual obligations to be utilized by the end of fiscal 2010.
Fiscal 2008
During fiscal 2008, the Company incurred restructuring, integration and other charges totaling $38.9 million
pre-tax, $31.5 million after tax and $0.21 per share on a diluted basis, related to cost reductions considered necessary
by management to improve the performance at certain business units and integration costs associated with recently
acquired businesses. The restructuring charges related primarily to severance and facility exit costs. Integration costs
recorded during fiscal 2008 included professional fees, facility moving costs, travel, meeting, marketing and
communication costs that were incrementally incurred as a result of the integration efforts of the recently acquired
businesses. The total of the restructuring charges and integration costs, net of $0.7 million for reversals of excess
lease and severance reserves established in prior fiscal periods, amounted to $29.9 million pre-
tax, $21.9 million after
tax and $0.15 per share on a diluted basis. Other charges included $6.0 million pre-tax, $7.7 million after tax and
$0.05 per share on a diluted basis related to the settlement of an indemnification to a former executive of an acquired
company (which was not tax deductible) and $3.0 million pre-tax, $1.8 million after tax and $0.01 per share on a
diluted basis for additional environmental costs associated with the reassessment of existing environmental matters.
The cost reduction actions taken during fiscal 2008 included severance charges related to personnel reductions
of over 350 employees in administrative, finance and sales functions. Personnel reductions consisted of
100 employees in all three regions of EM and over 250 in the Americas and EMEA for TS. The facility exit charges
related to five vacated office facilities, which included two facilities in the EM EMEA region, two in the TS EMEA
region and one in the TS Asia region. These facility exit charges consisted of reserves for remaining lease liabilities
and the write-down of leasehold improvements and other fixed assets. Other charges incurred included contractual
obligations with no on-going benefit to the Company.
The total amounts utilized during fiscal 2008 consisted of $8.4 million in cash payments and $0.7 million for the
non-cash write downs of assets. As of June 27, 2009, the remaining reserves totaled $3.0 million which included
severance reserves of $1.4 million, facility exit reserves for leases of $1.5 million and $0.1 million of other reserves.
Management expects the majority of the severance and other reserves to be utilized by the end of fiscal 2010 and
expects the facility exit reserves to be utilized by the end of fiscal 2013.
Fiscal 2007
During fiscal 2007, the Company incurred certain restructuring, integration and other charges amounting to
$7.4 million pre-tax, $5.3 million after tax and $0.03 per share on a diluted basis as a result of cost-reduction
initiatives in all three regions, the acquisition of Access on December 31, 2006 and other items. This included
restructuring charges of $13.6 million consisting of severance costs of $10.8 million, facility exit-costs of
$1.0 million, and other contract termination costs of $1.8 million. In addition, in connection with the Access
acquisition, the Company recorded integration costs of $7.3 million. The Company also recorded in “restructuring,
integration and other charges” the write-down of $0.7 million related to an Avnet-owned building in EMEA, and the
reversal of $1.7 million related primarily to excess severance and lease reserves, certain of which were previously
established through “restructuring, integration and other charges” in prior fiscal periods. Partially offsetting these
charges was a pre-tax benefit of $12.5 million which resulted from the favorable outcome of a contingent liability
acquired in connection with an acquisition completed in a prior year.
Severance charges related to Avnet personnel reductions of 96 employees in all three regions of EM and
42 employees in TS Americas and EMEA (a total of 138 employees) in administrative, finance and sales functions
associated with the cost reduction initiatives implemented during the third and fourth quarter of fiscal 2007 as part
23