Arrow Electronics 2010 Annual Report Download - page 38

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36
Under the terms of various joint venture agreements, the company is required to pay its pro-rata share of
the third party debt of the joint ventures in the event that the joint ventures are unable to meet their
obligations. At December 31, 2010, the company's pro-rata share of this debt was approximately $17.1
million. The company believes there is sufficient equity in the joint ventures to meet their obligations.
At December 31, 2010, the company had a liability for unrecognized tax benefits and a liability for the
payment of related interest totaling $78.5 million, of which approximately $12.3 million is expected to be
paid within one year. For the remaining liability, due to the uncertainties related to these tax matters, the
company is unable to make a reasonably reliable estimate when cash settlement with a taxing authority
will occur.
Share-Repurchase Program
In March 2010, the company announced its Board approved the repurchase of up to $100 million of the
company's common stock through a share-repurchase program. In July 2010, the company's Board
approved an additional repurchase of up to $100 million of the company's common stock. As of
December 31, 2010, the company repurchased 6,074,600 shares under these plans with a market value
of $167.3 million at the dates of repurchase.
Off-Balance Sheet Arrangements
The company has no off-balance sheet financing or unconsolidated special-purpose entities.
Critical Accounting Policies and Estimates
The company's consolidated financial statements are prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial statements requires the company
to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues,
and expenses and related disclosure of contingent assets and liabilities. The company evaluates its
estimates on an ongoing basis. The company bases its estimates on historical experience and on various
other assumptions that are believed reasonable under the circumstances; the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or
conditions.
The company believes the following critical accounting policies involve the more significant judgments and
estimates used in the preparation of its consolidated financial statements:
Revenue Recognition
The company recognizes revenue when there is persuasive evidence of an arrangement, delivery has
occurred or services are rendered, the sales price is determinable, and collectibility is reasonably
assured. Revenue typically is recognized at time of shipment. Sales are recorded net of discounts,
rebates, and returns, which historically have not been material.
A portion of the company's business involves shipments directly from its suppliers to its customers. In
these transactions, the company is responsible for negotiating price both with the supplier and customer,
payment to the supplier, establishing payment terms with the customer, product returns, and has risk of
loss if the customer does not make payment. As the principal with the customer, the company recognizes
the sale and cost of sale of the product upon receiving notification from the supplier that the product was
shipped.
The company has certain business with select customers and suppliers that is accounted for on an
agency basis (that is, the company recognizes the fees associated with serving as an agent in sales with
no associated cost of sales) in accordance with Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") Topic 605-45-45. Generally, these transactions relate to the