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ARROW ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
67
Cash equivalents consist primarily of overnight time deposits and institutional money market funds with
quality financial institutions. These financial institutions are located in many different geographical regions,
and the company's policy is designed to limit exposure with any one institution. As part of its cash and risk
management processes, the company performs periodic evaluations of the relative credit standing of these
financial institutions.
8. Income Taxes
The provision for income taxes for the years ended December 31 consists of the following:
2010 2009 2008
Current
Federal $ 88,302 $ 23,078 $ 55,459
State 13,482 636 5,510
International 80,461 22,389 43,965
182,245 46,103 104,934
Deferred
Federal 12,143 20,905 (33,232)
State 4,153 5,995 (1,892)
International 837 (7,587 ) (53,088)
17,133 19,313 (88,212)
$ 199,378 $ 65,416 $ 16,722
The principal causes of the difference between the U.S. federal statutory tax rate of 35% and effective
income tax rates for the years ended December 31 are as follows:
2010 2009 2008
United States $ 313,127 $ 108,106 $ 5,409
International 365,876 80,815 (602,322)
Income before income taxes $ 679,003 $ 188,921 $ (596,913)
Provision at statutory tax rate $ 237,651 $ 66,122 $ (208,919)
State taxes, net of federal benefit 11,463 4,310 2,352
International effective tax rate differential (49,923) (16,530 ) (28,801)
Non-deductible impairment charge - - 237,602
Other non-deductible expenses 4,040 2,634 10,424
Changes in tax accruals and reserves (2,145) 8,258 4,188
Other (1,708) 622 (124)
Provision for income taxes $ 199,378 $ 65,416 $ 16,722
In the fourth quarter of 2010, the company recorded a net reduction of the provision for income taxes of
$9,404 and a reduction of interest expense of $3,840 ($2,312 net of related taxes) primarily related to the
settlement of certain income tax matters covering multiple years.