Avnet 2006 Annual Report Download - page 80

Download and view the complete annual report

Please find page 80 of the 2006 Avnet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 98

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98

AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
3.0 years. The total fair values of shares vested during fiscal 2006, 2005 and 2004 were $10,689,000,
$12,548,000 and $10,752,000, respectively.
Cash received from option exercises during fiscal 2006, 2005 and 2004 totaled $30,879,000, $3,231,000,
and $15,264,000, respectively. The impact of these cash receipts is included in ""Other, net, financing
activities'' in the accompanying consolidated statements of cash flows.
Employee stock purchase plan
The Company has an Employee Stock Purchase Plan (""ESPP''), which was amended effective January
2006. Under the terms of the amended ESPP, eligible employees of the Company are offered options to
purchase shares of Avnet common stock at a price equal to 95% of the fair market value on the last day of
each monthly offering period. Previously the plan offered employees options to purchase shares of Avnet stock
at a price equal to 85% of the fair market value on the first or last day, whichever was lower, of each monthly
offering period. As a result of these amended terms, Avnet is not required to record expense in the
consolidated statements of operations related to the ESPP subsequent to the second quarter of fiscal 2006.
Therefore, the Company did not recognize any pre-tax compensation expense under the ESPP plan during the
third or fourth quarters of fiscal 2006. The pre-tax compensation expense recognized under the ESPP during
fiscal 2006 with the adoption of SFAS 123R was $465,000.
The Company has a policy of repurchasing shares on the open market to satisfy shares purchased under
the ESPP, and expects future repurchases during fiscal 2007 to be less than repurchases made during fiscal
2006, based on current estimates of participation in the program. During fiscal 2006, 2005 and 2004, there
were 175,454, 289,241, and 304,641 shares of common stock issued under the ESPP program.
Incentive stock
The Company has an Incentive Stock Program wherein, at July 1, 2006, a total of 1,150,155 shares were
still available for award, under Avnet's 2003 Stock Compensation Plan. The above referenced share balance is
also available for the granting of performance-based awards, as discussed below. Delivery of incentive shares,
and the associated compensation expense, is spread equally over a five-year period and is subject to the
employee's continued employment by the Company. As of July 1, 2006, 589,032 shares previously awarded
have not yet been delivered. Pre-tax compensation expense associated with this program was $4,586,000 and
$975,000 for fiscal years 2006 and 2005, respectively. In 2004 the Company did not award shares under this
program.
Performance shares
Beginning in fiscal 2006, eligible employees, including Avnet's executive officers, may receive a portion of
their long-term equity-based incentive compensation through the performance share program under Avnet's
2003 Stock Compensation Plan, which allows for the award of stock based upon performance-based criteria
(""Performance Shares''). The Performance Shares will provide for payment to each grantee of a number of
shares of Avnet's common stock at the end of a three-year period based upon the Company's achievement of
performance goals established by the Compensation Committee of the Board of Directors for each three-year
period. These performance goals are based upon a three-year cumulative increase in the Company's absolute
economic profit, as defined, over the prior three-year period and the increase in the Company's economic
profit relative to the increase in the economic profit of a peer group of companies. During fiscal 2006, the
Company granted 194,530 performance shares to be awarded to participants in the Performance Share
program in three years. The actual amount of Performance Shares issued at the end of the three year period
will be determined based upon the level of achievement of the defined performance goals. During each of the
first two years of this new program, participants may earn (vest in) a portion of the award granted, with the
74