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Restructuring, integration and other charges | 12 Months Ended
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Jul. 02, 2011
Restructuring, integration and other charges [Abstract] |
Restructuring, integration and other charges | 17. Restructuring, integration and other charges Fiscal 2011 During fiscal 2011, the Company incurred charges related primarily to the acquisition and integration activities associated with acquired businesses (see Note 2) and also recorded credits related to prior restructuring reserves and acquisition adjustments.
|  | Year Ended |
|  | July 2, 2011 |
|  | (Thousands) |
Restructuring charges |  | $ | 47,763 |
Integration costs |  |  | 25,068 |
Acquisition costs |  |  | 15,597 |
Reversal of excess prior year restructuring reserves |  |  | (6,076 | )
Prior year acquisition adjustments |  |  | (5,176 | )
Pre-tax restructuring, integration and other charges |  | $ | 77,176 |
After tax restructuring, integration and other charges |  | $ | 56,169 |
Restructuring, integration and other charges per share on a diluted basis |  | $ | 0.36 |
The activity related to the restructuring reserves established during fiscal 2011 is presented in the following table:
|  | Severance |  |  | Facility |  |  |  |  |  |  |
|  | Reserves |  |  | Exit Costs |  |  | Other |  |  | Total |
|  | (Thousands) |
Fiscal 2011 pre-tax charges |  | $ | 28,584 |  |  | $ | 17,331 |  |  | $ | 1,848 |  |  | $ | 47,673 |
Cash payments |  |  | (19,142 | ) |  |  | (5,651 | ) |  |  | (787 | ) |  |  | (25,580 | )
Non-cash write downs |  |  | — |  |  |  | (3,278 | ) |  |  | (51 | ) |  |  | (3,329 | )
Adjustments |  |  | (293 | ) |  |  | (349 | ) |  |  | (223 | ) |  |  | (865 | )
Other, principally foreign currency translation |  |  | 654 |  |  |  | 241 |  |  |  | 251 |  |  |  | 1,146 |
Balance at July 2, 2011 |  | $ | 9,803 |  |  | $ | 8,294 |  |  | $ | 1,038 |  |  | $ | 19,135 |
Severance charges recorded in fiscal 2011 related to personnel reductions of over 550 employees in administrative, finance and sales functions primarily in connection with the integration of the acquired Bell business into the existing EM Americas, TS Americas and TS EMEA regions and, to a lesser extent, other cost reduction actions. Facility exit costs consisted of lease liabilities, fixed asset write-downs and other related charges associated with 50 vacated facilities: 23 in the Americas, 25 in EMEA and two in the Asia/Pac region. As of July 2, 2011, management expects the majority of the remaining severance reserves to be utilized by the end of fiscal 2012 and the remaining facility exit cost reserves to be utilized by the end of fiscal 2014. Integration costs included professional fees associated with legal and IT consulting, facility moving costs, travel, meeting, marketing and communication costs that were incrementally incurred as a result of the integration efforts of acquired businesses. Also included in integration costs are incremental salary and employee benefit costs, primarily of the acquired businesses’ personnel who were retained by Avnet for extended periods following the close of the acquisitions solely to assist in the integration of the acquired business’ IT systems, and administrative and logistics operations into those of Avnet. These identified personnel have no other meaningful day-to-day operational responsibilities outside of the integration effort. Acquisition costs incurred during fiscal 2011 related primarily to professional fees for advisory and broker services, legal and accounting due diligence, and other legal costs associated with the acquisition. During fiscal 2011, the Company recorded credits to restructuring, integration and other charges related to (i) the reversal of restructuring reserves established in prior years that were deemed to be no longer required, (ii) acquisition adjustments for which the purchase allocation period had closed and (iii) exit-related reserves originally established through goodwill in prior years that were deemed no longer required, which were credited to the consolidated statement of operations rather than to goodwill because the associated goodwill was impaired in fiscal 2009 (see Notes 2 and 6). Fiscal 2010 During fiscal 2010, the Company recognized restructuring, integration and other charges related to remaining cost reduction actions announced in fiscal 2009 which were taken in response to market conditions as well as integration costs associated with acquired businesses in addition to a value-added tax exposure and acquisition-related costs partially offset by a credit related to prior restructuring reserves.
|  | Year Ended |
|  | July 3, 2010 |
|  | (Thousands) |
Restructuring charges |  | $ | 15,991 |
Integration costs |  |  | 2,931 |
Value-added tax exposure |  |  | 6,477 |
Other |  |  | 3,261 |
Reversal of excess restructuring reserves recorded in prior periods |  |  | (3,241 | )
Pre-tax restructuring, integration and other charges |  | $ | 25,419 |
After tax restructuring, integration and other charges |  | $ | 18,789 |
Restructuring, integration and other charges per share on a diluted basis |  | $ | 0.12 |
Restructuring charges incurred in fiscal 2010 consisted of severance, facility exit costs and other charges. Severance charges were related to personnel reductions of over 150 employees in administrative, finance and sales functions in connection with the cost reduction actions in all three regions. Facility exit costs consisted of lease liabilities and fixed asset write-downs associated with seven vacated facilities in the Americas, one in EMEA and four in the Asia/Pac region. Other charges consisted primarily of contractual obligations with no on-going benefit to the Company. During fiscal 2010, the Company incurred integration costs for professional fees, facility moving costs and travel, meeting, marketing and communication costs that were incrementally incurred as a result of the integration efforts of previously acquired businesses. Also during fiscal 2010, the Company recognized a charge for a value-added tax exposure in Europe related to an audit of prior years and other charges related primarily to acquisition-related costs which would have been capitalized under prior accounting rules. In addition, the Company recognized a credit to reverse restructuring reserves which were determined to be no longer necessary. The fiscal 2011 activity related to the restructuring charges is presented in the following table:
|  | Severance |  |  | Facility |  |  |  |  |  |  |
|  | Reserves |  |  | Exit Costs |  |  | Other |  |  | Total |
|  | (Thousands) |
Balance at July 3, 2010 |  | $ | 539 |  |  | $ | 1,405 |  |  | $ | 1,836 |  |  | $ | 3,780 |
Cash payments |  |  | (400 | ) |  |  | (279 | ) |  |  | (443 | ) |  |  | (1,122 | )
Adjustments |  |  | (144 | ) |  |  | (903 | ) |  |  | 421 |  |  |  | (626 | )
Other, principally foreign currency translation |  |  | 22 |  |  |  | 9 |  |  |  | 152 |  |  |  | 183 |
Balance at July 2, 2011 |  | $ | 17 |  |  | $ | 232 |  |  | $ | 1,966 |  |  | $ | 2,215 |
As of July 2, 2011, management expects the majority of the remaining severance and other reserves to be utilized by the end of fiscal 2012 and the remaining facility exit cost reserves to be utilized by the end of fiscal 2013. Fiscal 2009 In response to the decline in sales and gross profit margin due to weaker market conditions, the Company initiated significant cost reduction actions during fiscal 2009 in order to realign its expense structure with market conditions. As a result, the Company incurred restructuring, integration and other charges during fiscal 2009 related to the cost reductions as well as integration costs associated with recently acquired businesses as presented in the following table.
|  | Year Ended |
|  | June 27, 2009 |
|  | (Thousands) |
Restructuring charges |  | $ | 84,976 |
Integration costs |  |  | 11,160 |
Reversal of excess prior year restructuring reserves |  |  | (2,514 | )
Prior year acquisition adjustments |  |  | (1,201 | )
Loss on investment |  |  | 3,091 |
Incremental amortization |  |  | 3,830 |
Pre-tax restructuring, integration and other charges |  | $ | 99,342 |
After tax restructuring, integration and other charges |  | $ | 65,310 |
Restructuring, integration and other charges per share on a diluted basis |  | $ | 0.43 |
Restructuring charges included severance, facility exit costs and other charges. Severance charges related to personnel reductions of approximately 1,900 employees in administrative, finance and sales functions in connection with the cost reduction actions in all three regions of both operating 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. Other charges included fixed asset write-downs and contractual obligations with no on-going benefit to the Company. The Company also recorded a reversal for severance, lease and other reserves that were deemed excessive and was credited to restructuring, integration and other charges. Integration costs included professional fees, facility moving costs, travel, meeting, marketing and communication costs that were incrementally incurred as a result of the acquisition integration efforts. Other items recorded to restructuring, integration and other charges included a net credit related to acquisition adjustments for which the purchase allocation period had closed, a loss resulting from a decline in the market value of certain small investments that the Company liquidated, and incremental intangible asset amortization. The following table presents the activity during fiscal 2011 related to restructuring reserves established as part of this plan:
|  | Severance |  |  | Facility |  |  |  |  |  |  |
|  | Reserves |  |  | Exit Costs |  |  | Other |  |  | Total |
|  | (Thousands) |
Balance at July 3, 2010 |  | $ | 1,920 |  |  | $ | 17,136 |  |  | $ | 1,634 |  |  | $ | 20,690 |
Cash payments |  |  | (1,432 | ) |  |  | (7,551 | ) |  |  | (414 | ) |  |  | (9,397 | )
Adjustments |  |  | (319 | ) |  |  | (4,161 | ) |  |  | (1,703 | ) |  |  | (6,183 | )
Other, principally foreign currency translation |  |  | 130 |  |  |  | 175 |  |  |  | 483 |  |  |  | 788 |
Balance at July 2, 2011 |  | $ | 299 |  |  | $ | 5,599 |  |  | $ | — |  |  | $ | 5,898 |
As of July 2, 2011, management expects the majority of the remaining severance reserves to be utilized by the end of fiscal 2012 and the remaining facility exit cost reserves to be utilized by the end of fiscal 2015. Fiscal 2008 and prior restructuring reserves In fiscal 2008 and prior, the Company incurred restructuring charges under four separate restructuring plans of which two are remaining. As of July 2, 2011, the remaining reserves associated with these actions totaled $801,000 which are expected to be fully utilized by the end of fiscal 2012.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 5.P.4) -URI http://asc.fasb.org/extlink&oid=6394695&loc=d3e140904-122747 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6394359&loc=d3e17939-110869 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 146 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 5 -Section P -Subsection 3, 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 5.P.3) -URI http://asc.fasb.org/extlink&oid=6394695&loc=d3e140864-122747 + Details
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