Avnet 2006 Annual Report Download - page 81

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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
shares to be issued at the end of the three-year period. During fiscal 2006, the Company recognized pre-tax
compensation expense associated with the Performance Shares of $2,559,000.
Outside director stock bonus plan
Prior to the second quarter of fiscal 2006, the Company had a program whereby non-employee directors
were awarded shares equal to $20,000 of Avnet common stock upon their re-election each year, as part of their
director compensation package. Directors may elect to receive this compensation in the form of common stock
under the Outside Director Stock Bonus Plan or they may elect to defer their compensation to be paid in
common stock at a later date. Shares under this plan were issued in January of each year and the number of
shares was calculated by dividing $20,000 by the average of the high and low price of Avnet common stock on
the first business day of January. During the second quarter of fiscal 2006, this plan was amended such that
directors are awarded shares equal to $75,000 effective with the January 2006 award. The increase in the value
of shares awarded to directors of the Company was part of a change in director's compensation, which also
eliminated the granting of options to the non-employee directors. As of July 1, 2006, this plan has been
effectively terminated, and all future equity awards to non-employee directors will be made under Avnet's
2003 Stock Compensation Plan.
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 per share
Basic earnings per share is computed based on the weighted average number of common shares
outstanding and excludes any potential dilution. Diluted earnings per share reflect potential dilution from the
exercise or conversion of securities into common stock.
Years Ended
July 1, July 2, July 3,
2006 2005 2004
(Thousands, except per share data)
Numerator:
Net income for basic earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $204,547 $168,239 $ 72,897
Interest on 4.5% Convertible Notes due September 1, 2004 ÏÏÏ Ì Ì 100
Net income for diluted earnings per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $204,547 $168,239 $ 72,997
Denominator:
Weighted average common shares for basic earnings per share 145,942 120,629 120,086
Net effect of dilutive stock options and restricted stock awards 1,208 840 1,113
Net effect of 4.5% Convertible Notes due September 1, 2004 Ì Ì 53
Weighted average common shares for diluted earnings per
share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 147,150 121,469 121,252
Basic earnings per shareÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.40 $ 1.39 $ 0.61
Diluted earnings per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1.39 $ 1.39 $ 0.60
75