Restructuring, integration and other charges

Fiscal 2012

During the second quarter of fiscal 2012, the Company initiated actions to reduce costs in both operating groups in response to current market conditions and incurred acquisition and integration costs associated with recently acquired businesses. As a result, the Company incurred restructuring, integration and other charges as presented in the following table.



	Quarter Ended December 31, 2011
	(Thousands)
Restructuring charges	$	28,938
Integration costs	3,449
Acquisition transaction costs	3,066
Reversal of excess prior year restructuring reserves	(948		)
Pre-tax restructuring, integration and other charges	$	34,505
After tax restructuring, integration and other charges	$	23,563
Restructuring, integration and other charges per share on a diluted basis	$	0.16

The activity related to the restructuring charges incurred during the second quarter of fiscal 2012 is presented in the following table:



	Severance Reserves			Facility Exit Costs			Other			Total
	(Thousands)
Fiscal 2012 pre-tax charges	$	19,792		$	7,406		$	1,740		$	28,938
Cash payments	(7,327		)	(17		)	(518		)	(7,862		)
Non-cash write downs	—			(1,719		)	—			(1,719		)
Other, principally foreign currency translation	(191		)	7			(12		)	(196		)
Balance at December 31, 2011	$	12,274		$	5,677		$	1,210		$	19,161

Severance charges recorded in the second quarter of fiscal 2012 related to personnel reductions of approximately 350 employees in sales, administrative and finance functions in connection with the cost reduction actions taken in all three regions in both operating groups with employee reductions of approximately 250 in EM and 100 in TS. Facility exit costs for vacated facilities related to 14 vacated facilities: nine in the Americas, three in EMEA and two in the Asia/Pac region and consisted of reserves for remaining lease liabilities and the write-down of leasehold improvements and other fixed assets. Other restructuring charges related primarily to other onerous lease obligations that have no on-going benefit to the Company. Of the $28,938,000 pre-tax restructuring charges recorded during the second quarter of fiscal 2012, $19,494,000 related to EM and $9,444,000 related to TS. As of December 31, 2011, management expects the majority of the remaining severance and other reserves to be utilized by the end of fiscal 2013 and the remaining facility exit cost reserves to be utilized by the end of fiscal 2018.

Integration costs incurred 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 the consolidation and closure activities as well as costs associated with acquisition activity, primarily related to 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 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.

Acquisition transaction costs incurred during the second quarter ended December 31, 2011 related primarily to professional fees for advisory and broker services and legal and accounting due diligence procedures and other legal costs associated with acquisitions.

Fiscal 2011

During fiscal 2011, the Company incurred restructuring, integration and other charges related to acquisition and integration activities associated with acquired businesses. The following table presents the activity during the first six months of fiscal 2012 related to the remaining restructuring reserves established during fiscal 2011.



	Severance Reserves			Facility Exit Costs			Other			Total
	(Thousands)
Balance at July 2, 2011	$	9,803		$	8,294		$	1,038		$	19,135
Cash payments	(5,874		)	(1,693		)	(294		)	(7,861		)
Adjustments	(211		)	(229		)	(132		)	(572		)
Other, principally foreign currency translation	(594		)	(335		)	(33		)	(962		)
Balance at December 31, 2011	$	3,124		$	6,037		$	579		$	9,740

As of December 31, 2011, management expects the majority of the remaining severance and other reserves to be utilized by the end of fiscal 2013 and the remaining facility exit cost reserves to be utilized by the end of fiscal 2016.

Fiscal 2010 and prior restructuring reserves

In fiscal 2010 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 six months of fiscal 2012 related to the remaining restructuring reserves that were established during and prior to fiscal 2010.



	Severance Reserves			Facility Exit Costs			Other			Total
	(Thousands)
Balance at July 2, 2011	$	316		$	6,632		$	1,966		$	8,914
Cash payments	(27		)	(2,774		)	(62		)	(2,863		)
Adjustments	(36		)	(384		)	—			(420		)
Other, principally foreign currency translation	(27		)	(83		)	(176		)	(286		)
Balance at December 31, 2011	$	226		$	3,391		$	1,728		$	5,345

As of December 31, 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 2014.