Avnet 2005 Annual Report Download - page 55

AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
In addition, the Company has more limited contractual relationships with certain of its customers and
suppliers whereby Avnet assumes an agency relationship in the transaction as defined by EITF 99-19. In such
arrangements, the Company recognizes the fee associated with serving as an agent in sales with no associated
cost of sales.
Revenues from maintenance contracts are recognized ratably over the life of the contracts, ranging from
one to three years. Revenues are recorded net of discounts, rebates and estimated returns. Provisions are made
for discounts and rebates, which are primarily volume-based, and are based on historical trends and
anticipated customer buying patterns. Provisions for returns are estimated based on historical sales returns,
credit memo analysis and other known factors.
Comprehensive income (loss) Ì Comprehensive income (loss) represents net income (loss) for the year
adjusted for changes in shareholders' equity from non-shareholder sources. Cumulative comprehensive
income (loss) items typically include currency translation, valuation adjustments for marketable securities and
the impact of the Company's additional minimum pension liability, net of tax (see Note 4).
Stock-based compensation Ì The Company accounts for its stock based compensation plans using the
intrinsic value method initially prescribed by Accounting Principles Board Opinion No. 25 (""APB 25''),
Accounting for Stock Issued to Employees. In applying APB 25, no expense is recognized upon grant of stock
under the Company's various stock option plans, except in the rare circumstances where the exercise price is
less than the fair market value on the grant date, nor is expense recognized in connection with shares
purchased by employees under the Employee Stock Purchase Plan (see Note 12).
No expense was recognized for options granted under the Company's various stock option plans as the
options granted during the periods presented had exercise prices equal to the market value of the underlying
stock on the date of the grants. FASB Statement of Financial Accounting Standards No. 148, Accounting for
Stock-Based Compensation Ì Transition and Disclosure Ì An Amendment of FASB Statement No. 123,
requires certain disclosures of the pro forma impact on net income (loss) and earnings (loss) per share as if a
fair value-based method of measuring stock-based compensation, as defined by the FASB's Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, had been applied.
Reported and pro forma net income (loss) and earnings (loss) per share are as follows:
Years Ended
July 2, July 3, June 27,
2005 2004 2003
(Thousands, except per share amounts)
Net income (loss), as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $168,239 $ 72,897 $(46,116)
Less: Fair value impact of employee stock compensation, net
of tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (7,717) (9,668) (8,953)
Pro forma net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $160,522 $ 63,229 $(55,069)
Earnings (loss) per share:
Basic Ì as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.39 $ 0.61 $ (0.39)
Basic Ì pro forma ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.33 $ 0.53 $ (0.46)
Diluted Ì as reportedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.39 $ 0.60 $ (0.39)
Diluted Ì pro formaÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.32 $ 0.52 $ (0.46)
Number of shares of common stock issued under the
employee stock purchase plan ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 289,241 304,641 548,932
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