Restructuring, integration and other charges

Fiscal 2013

During the third quarter and first nine months of fiscal 2013, the Company initiated actions to reduce costs in both operating groups in response to continued weakness in business conditions. In addition, the Company incurred acquisition and integration costs associated with recently acquired businesses. The following table presents the restructuring, integration and other charges incurred during the third quarter and first nine months of fiscal 2013.



	Third Quarter Ended March 30, 2013			Nine Months Ended March 30, 2013
	(Thousands, except per share data)
Restructuring charges	$	23,874		$	70,193
Integration costs	14,882			27,506
Acquisition related costs and adjustments	(10,840		)	(5,048		)
Reversal of excess prior year restructuring reserves	(575		)	(2,996		)
Pre-tax restructuring, integration and other charges	$	27,341		$	89,655
After tax restructuring, integration and other charges	$	25,786		$	72,772
Restructuring, integration and other charges per share on a diluted basis	$	0.18		$	0.52

The activity related to the restructuring charges incurred during fiscal 2013 is presented in the following table:



	Severance Reserves			Facility Exit Costs			Other			Total
	(Thousands)
Fiscal 2013 pre-tax charges	$	47,822		$	14,817		$	7,554		$	70,193
Cash payments	(31,226		)	(1,652		)	(595		)	(33,473		)
Non-cash write-downs	—			(1,276		)	(6,635		)	(7,911		)
Other, principally foreign currency translation	(146		)	(204		)	(7		)	(357		)
Balance at March 30, 2013	$	16,450		$	11,685		$	317		$	28,452

Severance charges recorded in the first nine months of fiscal 2013 related to the reduction of 1,160 employees in sales, and business support functions in connection with the cost reduction actions taken in all three regions in both operating groups with employee reductions of approximately 814 in EM, 295 in TS and 51 in business support functions. Facility exit costs for vacated facilities related to fourteen facilities in the Americas, twelve in EMEA, and six in Asia and consisted of reserves for remaining lease liabilities and the write-down of fixed assets. Other restructuring charges related primarily to other onerous lease obligations that have no on going benefit to the Company as well as a loss of $6,634,000 recognized in the third quarter of fiscal 2013 from the write-down of the net assets and goodwill associated with the planned exit of a non-integrated business in the EM Americas region that is expected to take place in the fourth quarter of fiscal 2013. Of the $70,193,000 pre-tax restructuring charges recorded during the first nine months of fiscal 2013, $44,120,000 related to EM, $25,215,000 related to TS and $858,000 related to business support functions. As of March 30, 2013, management expects the majority of the remaining severance and other reserves to be utilized by the end of fiscal 2014 and the remaining facility exit cost reserves to be utilized by the end of fiscal 2018.

Integration costs incurred were related to the integration of acquired businesses and incremental costs incurred as part of the consolidation and closure of certain office and warehouse locations. Integration costs included IT consulting costs for system integration assistance, facility moving costs, legal fees, travel, meeting, marketing and communication costs that were incrementally incurred as a result of the integration activity. Also included in integration costs are incremental salary costs associated with consolidation and closure activities, as well as, costs associated with acquisition activity, primarily related to the acquired businesses' personnel who were retained by Avnet following the close of the acquisitions solely to assist in the integration of the acquired businesses' 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. Included in integration costs during the third quarter of fiscal 2013 is a loss of $8,789,000 related to the exit of two multi-employer pension plan associated with acquired entities in Japan.

Acquisition related costs and adjustments consisted primarily of professional fees for due diligence work and other legal costs associated with the transactions. Included in acquisition related costs and adjustments during the third quarter of fiscal 2013 is a credit of $11,172,000 from the reversal of an earn-out liability for which payment is no longer expected to be incurred.

Fiscal 2012

During fiscal 2012, the Company incurred restructuring charges and integration and other charges related to acquisition and integration activities associated with acquired businesses. The following table presents the activity during the first nine months of fiscal 2013 related to the remaining restructuring reserves established during fiscal 2012.



	Severance Reserves			Facility Exit Costs			Other			Total
	(Thousands)
Balance at June 30, 2012	$	9,746		$	4,544		$	1,347		$	15,637
Cash payments	(7,709		)	(1,526		)	(759		)	(9,994		)
Adjustments	(1,068		)	(995		)	(149		)	(2,212		)
Other, principally foreign currency translation	168			9			29			206
Balance at March 30, 2013	$	1,137		$	2,032		$	468		$	3,637

As of March 30, 2013, management expects the majority of the remaining severance and other reserves to be utilized by the end of fiscal 2015 and the remaining facility exit cost reserves to be utilized by the end of fiscal 2016.

Fiscal 2011 and prior restructuring reserves

In fiscal 2011 and prior, the Company incurred restructuring, integration and other charges of which four restructuring plans are remaining. The following table presents the activity during the first nine months of fiscal 2013 related to the remaining restructuring reserves that were established during fiscal 2011 and prior.



	Severance Reserves			Facility Exit Costs			Other			Total
	(Thousands)
Balance at June 30, 2012	$	443		$	4,977		$	905		$	6,325
Cash payments	(133		)	(2,674		)	(21		)	(2,828		)
Adjustments	(159		)	(592		)	(56		)	(807		)
Other, principally foreign currency translation	19			18			22			59
Balance at March 30, 2013	$	170		$	1,729		$	850		$	2,749

As of March 30, 2013, management expects the majority of the remaining severance and other reserves to be utilized by the end of fiscal 2019 and the remaining facility exit cost reserves to be utilized by the end of fiscal 2016.