Avnet 2005 Annual Report Download - page 73

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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
13. Contingent liabilities
From time to time, the Company may become liable with respect to pending and threatened litigation,
taxes and environmental and other matters. The Company has been designated a potentially responsible party
or has become aware of other potential claims against it in connection with environmental clean-ups at several
sites. Based upon the information known to date, the Company believes that it has appropriately reserved for
its share of the costs of the clean-ups and it is not anticipated that any contingent matters will have a material
adverse impact on the Company's financial condition, liquidity or results of operations.
14. Earnings (loss) per share
Basic earnings (loss) per share is computed based on the weighted average number of common shares
outstanding and excludes any potential dilution. Diluted earnings (loss) per share reflect potential dilution
from the exercise or conversion of securities into common stock.
Years Ended
July 2, July 3, June 27,
2005 2004 2003
(Thousands, except per share data)
Numerator:
Net income (loss) for basic earnings (loss) per share ÏÏÏÏÏÏÏÏ $168,239 $ 72,897 $(46,116)
Interest on 4.5% Convertible Notes due September 1, 2004 ÏÏÏ Ì 100 Ì
Net income (loss) for diluted earnings (loss) per shareÏÏÏÏÏÏÏ $168,239 $ 72,997 $(46,116)
Denominator:
Weighted average common shares for basic earnings (loss) per
share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 120,629 120,086 119,456
Net effect of dilutive stock options and restricted stock awards 840 1,113 Ì
Net effect of 4.5% Convertible Notes due September 1, 2004ÏÏ Ì 53 Ì
Weighted average common shares for diluted earnings (loss)
per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 121,469 121,252 119,456
Basic earnings (loss) per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.39 $ 0.61 $ (0.39)
Diluted earnings (loss) per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.39 $ 0.60 $ (0.39)
The 4.5% convertible notes are excluded from the computation of loss per share in fiscal 2003 as the
effects were antidilutive. Shares issuable upon conversion of the 2% Convertible Debentures are also excluded
from the computation of earnings per share for fiscal 2005 and 2004 because, upon conversion, the Company
will deliver cash in lieu of common stock as the Company made an irrevocable election in December 2004 to
satisfy the principal portion of the Debentures, if converted, in cash (see Note 7).
The effects of certain stock options and restricted stock awards are also excluded from the determination
of the weighted average common shares for diluted earnings (loss) per share in each of the periods presented
as the effects were antidilutive or the exercise price for the outstanding options exceeded the average market
price for the Company's common stock. Accordingly, in fiscal 2005 and 2004, the effects of approximately
3,805,000 and 4,276,000 shares, respectively, related to stock options are excluded from the computation
above, all of which relate to options for which exercise prices were greater than the average market price of the
Company's common stock. In fiscal 2003, the effects of approximately 10,682,000 shares, related to stock
options and restricted stock awards, are excluded from the computation above, of which approximately
10,467,000 related to options for which the exercise prices were greater than the average market price of the
Company's common stock (see Note 12 for options outstanding and weighted average exercise prices).
65