Avnet 2009 Annual Report Download - page 76

Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
charges for an indemnification payment related to a prior year acquisition and costs associated with the reassessment
of existing environmental matters. A summary of these charges is presented in the following table:
The restructuring charges related primarily to severance and facility exit costs. The 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 (see
Note 2). The total of the restructuring charges and integration costs, net of reversals, amounted to $29,970,000 pre
-
tax, $21,938,000 after tax and $0.15 per share on a diluted basis. In addition, the Company recorded $6,005,000 pre-
tax, $7,718,000 after tax and $0.05 per share on a diluted basis related to the settlement of an indemnification of a
former executive of an acquired company, which was not tax deductible. Finally, the Company recorded additional
environmental costs associated with the reassessment of existing environmental matters which amounted to
$2,967,000 pre-tax, $1,813,000 after tax and $0.01 per share on a diluted basis.
Severance charges related to personnel reductions of over 350 employees in administrative, finance and sales
functions in connection with the cost reductions implemented during the second half of the fiscal year. Personnel
reductions consisted of 100 employees in all three regions of EM and over 250 in the Americas and EMEA regions
of TS. The facility exit charges related to five office facilities where facilities have been vacated, 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 restructuring charges and activity related to the cost reductions are presented in the following table:
The total amounts utilized during the fiscal year, as presented in the preceding table, consisted of $8,454,000 in
cash payments and $54,000 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 in fiscal 2010, the remaining facility exit cost reserves to
be utilized by the end of fiscal 2013 and other contractual obligations to be utilized by the end of fiscal 2010.
73
Year Ended
June 27, 2009
(Thousands)
Restructuring charges
$
23,286
Integration costs
7,388
Reversal of excess prior year restructuring reserves
(704
)
Sub
-
total
29,970
Indemnification payment
6,005
Environmental costs
2,967
Total restructuring, integration and other charges
$
38,942
Severance
Facility
Reserves
Exit Costs
Other
Total
(Thousands)
Balance at June 28, 2008
$
10,477
$
2,833
$
1,130
$
14,440
Amounts utilized
(6,917
)
(851
)
(740
)
(8,508
)
Adjustments
(1,459
)
(163
)
(171
)
(1,793
)
Other, principally foreign currency translation
(706
)
(351
)
(105
)
(1,162
)
Balance at June 27, 2009
$
1,395
$
1,468
$
114
$
2,977