Arrow Electronics 2000 Annual Report Download - page 45

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The company maintains an unfunded supplemental retirement plan for certain executives. The board
of directors determines those employees eligible to participate in the plan and their maximum annual
benefit upon retirement. Wyle also sponsored a supplemental executive retirement plan for certain of
its executives. Benefit accruals for the Wyle plan have been frozen as of December 31, 2000. Expenses
relating to the plans were $4,597,000, $2,150,000, and $2,367,000 for the years ended December 31, 2000,
1999, and 1998, respectively. Included in the 2000 amount is $147,000 relating to the Wyle plan since
acquisition.
Wyle provided retirement benefits for certain employees under a defined benefit plan. Benefits under
this plan have been frozen as of December 31, 2000 and former participants may now participate in
the company’s stock ownership plan. Pension information as of the year ended December 31, 2000
is as follows:
(In thousands)
Benefit obligation at end of year $75,321
Fair value of plan assets at end of year $80,219
Funded status of the plan
Funded status $ 4,899
Unamortized net loss 1,636
Net amount recognized $ 6,535
Weighted average assumptions
Discount rate 7.5%
Expected return on assets 8.5%
10 Lease Commitments
The company leases certain office, distribution, and other property under noncancelable operating
leases expiring at various dates through 2053. Rental expense under noncancelable operating leases,
net of sublease income of $3,151,000, $3,362,000, and $2,469,000 in 2000, 1999, and 1998, respectively,
amounted to $47,863,000 in 2000, $40,382,000 in 1999, and $29,231,000 in 1998. Aggregate minimum rental
commitments under all noncancelable operating leases, exclusive of real estate taxes, insurance, and
leases related to facilities closed in connection with the realignment of NACO and the integration of
the acquired businesses, are $63,417,000 in 2001, $45,386,000 in 2002, $34,535,000 in 2003, $27,959,000
in 2004, $20,102,000 in 2005, and $96,498,000 thereafter.
11 Financial Instruments
The company enters into foreign exchange forward contracts (the “ contracts” ) to mitigate the impact
of changes in foreign currency exchange rates, principally French franc, Swedish krona, Italian lira,
and British pound sterling. These contracts are executed to facilitate the netting of offsetting foreign
currency exposures resulting from inventory purchases and sales, and generally have terms of no more
than three months. Gains or losses on these contracts are deferred and recognized when the underlying
future purchase or sale is recognized. The company does not enter into forward contracts for trading
purposes. The risk of loss on a contract is the risk of nonperformance by the counterparties which the
company minimizes by limiting its counterparties to major financial institutions. The fair value of the
contracts is estimated using market quotes. The notional amount of the contracts at December 31,
2000 and 1999, was $81,736,000 and $59,348,000, respectively. The carrying amounts, which are nominal,
approximated fair value at December 31, 2000 and 1999.