Avnet 2000 Annual Report Download - page 29

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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. Long-term leases:
The Company leases many of its operating facilities and is also committed under lease agreements for transportation and operating equipment. Rent expense
charged to operations for the three years ended June 30, 2000 is as follows: Years Ended
(Thousands) June 30, July 2, June 26,
2000 1999 1998
Buildings $ 28,695 $ 22,744 $ 21,288
Equipment 5,692 4,926 4,938
$ 34,387 $ 27,670 $ 26,226
At June 30, 2000, aggregate future minimum lease commitments, principally for buildings, in 2001, 2002, 2003, 2004, 2005 and thereafter (through 2015)
are $31,649,000, $25,827,000, $21,878,000, $18,491,000, $13,985,000 and $44,436,000, respectively.
10. Stock-based compensation plans:
Stock option plans:
The Company has five stock option plans with shares still available for grant:
Plan
1990 1995 1996 1997 1999
Minimum exercise price as a percentage of fair
market value at date of grant 100% 85% 100% 85% 85%
Plan termination date 11/ 28/ 00 8/ 31/ 05 12/ 31/ 06 11/ 19/ 07 11/ 21/ 09
Shares available for grant at June 30, 2000 74,400 47,750 1,043,600 105,900 4,000,000
If applicable, the excess of the fair market value at the date of grant over the exercise price is considered deferred compensation which is amortized and
charged against income as it is earned. The maximum term of options granted under any of the plans is 10 years from the date of grant.
The following is a summary of the changes in outstanding options for the three years ended June 30, 2000:
2000 1999 1998
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding at beginning of year 6,513,054 $21.70 4,765,810 $23.29 4,424,176 $19.84
Granted 2,493,674 16.05 2,186,000 18.18 1,115,000 31.34
Exercised (1,926,224) 13.82 (162,206) 15.95 (605,566) 13.20
Canceled or expired (247,568) 21.93 (276,550) 24.66 (167,800) 22.00
Outstanding at end of year 6,832,936 21.85 6,513,054 21.70 4,765,810 23.29
Exercisable at the end of year 3,445,436 21.77 2,879,804 20.90 2,158,310 18.70
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. Stock-based compensation plans (continued):
The shares granted in 2000 shown above include 1,388,474 options granted to former employees of Marshall Industries as substitute options for Marshall
options outstanding on the date of acquisition. These options are subject to the terms of the various Marshall plans assumed by Avnet as part of the acqui-
sition. Of these options, 73,390 had not yet been exercised at June 30, 2000.
The following information relates to options outstanding at June 30, 2000:
Options Outstanding Options Exercisable
Weighted
Weighted Average Weighted
Range of Number Average Remaining Average
Exercise of Options Exercise Contractual Number Exercise
Prices Outstanding Price Life Of Options Price
Under $10 87,796 $8.81 36 Months 87,796 $8.81
$10.00 – 15.00 369,228 13.20 47 Months 369,228 13.20
15.00 – 20.00 2,417,500 17.87 86 Months 983,500 17.85
20.00 – 25.00 2,746,912 22.87 86 Months 1,408,412 23.54
25.00 – 30.00 122,000 26.61 100 Months 30,000 26.50
30.00 – 35.00 1,089,500 31.56 87 Months 566,500 31.53
Employee stock purchase plan:
In October 1995, the Company implemented the Avnet Employee Stock Purchase Plan (ESPP). Under the terms of the ESPP, eligible employees of the
Company are offered options to purchase shares of Avnet common stock at a price equal to 85% of the fair market value on the first or last day, whichever
is lower, of each monthly offering period. A total of 1,000,000 shares of Avnet common stock were initially reserved for sale under the ESPP and in November
1998 an additional 1,000,000 shares were reserved. At June 30, 2000, employees had purchased 1,428,150 shares and 571,850 shares were still available
for purchase under the ESPP.
Incentive stock:
The Company has an Incentive Stock Program wherein a total of 360,790 shares were still available for award at June 30, 2000 based upon operating
achievements. Delivery of incentive shares is spread equally over a four-year period and is subject to the employee’s continuance in the Company’s employ.
As of June 30, 2000, 98,606 shares previously awarded have not yet been delivered. The program will terminate on December 31, 2004.
At June 30, 2000, 13,135,832 common shares were reserved for stock options (including the ESPP) and stock incentive programs.
Pro forma information:
The Company follows Accounting Principles Board Opinion 25 (“APB 25”), “Accounting for Stock Issued to Employees”, in accounting for its stock-based
compensation plans. In applying APB 25, no expense was recognized for options granted under the various stock option plans (except in the rare circum-
stances where the exercise price was less than the fair market value on the date of the grant) nor was expense recognized in connection with shares pur-
chased by employees under the ESPP. Statement of Financial Accounting Standards No. 123 (“SFAS 123”), “Accounting for Stock-Based Compensation”,
requires disclosure of pro forma net income as if a fair value-based method of measuring stock-based compensation had been applied. Reported and
pro-forma net income and diluted earnings per share are as follows: