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Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
receivable valuation, net operating losses, certain accruals and depreciation, net of any changes to the valuation
allowance.
The provision for income taxes noted above is computed based upon the split of income (loss) before income
taxes from U.S. and foreign operations. U.S. income (loss) before income taxes was ($722,021,000), $352,854,000
and $253,380,000 and foreign income (loss) before income taxes was ($361,053,000), $356,101,000 and
$333,239,000 in fiscal 2009, 2008 and 2007, respectively.
A reconciliation between the federal statutory tax rate and the effective tax rate is as follows:
Foreign tax rates generally consist of the impact of the difference between foreign and federal statutory rates
applied to foreign income (losses) and also include the impact of valuation allowances against the Company’s
otherwise realizable foreign loss carry-forwards.
The change in the fiscal 2009 effective tax rate over prior year is due to the impact of non-deductible
impairment charges and a change to estimates for existing tax positions, net of favorable tax audit settlements of
$21,672,000, or $0.14 per share. Excluding the impact of these charges, the effective tax rate for fiscal 2009 is
29.9%. The decrease in the fiscal 2008 effective tax rate over fiscal 2007 was attributable to (i) certain statutory tax
rate reductions; (ii) a favorable audit settlement, offset by; (iii) the recognition of transfer pricing exposures; and
(iv) a change to estimates for existing tax positions.
59
Years Ended
June 27,
June 28,
June 30,
2009
2008
2007
(Thousands)
Current:
Federal
$
69,835
$
53,350
$
34,992
State and local
7,689
30,361
10,685
Foreign
50,007
19,015
48,271
Total current taxes
127,531
102,726
93,948
Deferred:
Federal
(51,764
)
54,738
49,561
State and local
(4,585
)
(9,697
)
3,265
Foreign
(31,794
)
62,107
46,778
Total deferred taxes
(88,143
)
107,148
99,604
Provision for income taxes
$
39,388
$
209,874
$
193,552
Years Ended
June 27,
June 28,
June 30,
2009
2008
2007
Federal statutory rate
(35.0
)%
35.0
%
35.0
%
State and local income taxes, net of federal benefit
0.3
2.2
1.8
Foreign tax rates, including impact of valuation allowances
(2.0
)
(5.3
)
(5.0
)
Change in contingency reserves(1)
(1.9
)
(3.5
)
0.9
Impairment charges
42.4
—
—
Other, net
(0.2
)
1.2
0.3
Effective tax rate
3.6
%
29.6
%
33.0
%
(1)
Includes a benefit of 2.9% and 5.5% related to tax audit settlements in fiscal 2009 and 2008, respectively.