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Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
9. Income taxes
The components of the provision for income taxes are indicated in the table below. The tax provision for deferred income taxes
results from temporary differences arising principally from inventory valuation, accounts 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 $273,287,000, $241,029,000 and ($733,915,000) and foreign
income (loss) before income taxes was $597,679,000, $344,054,000 and ($361,053,000) in fiscal 2011, 2010 and 2009, 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.
Avnet’
s effective tax rate on income before income taxes was 23.2% in fiscal 2011 as compared with an effective tax rate of
29.9% in fiscal 2010. As compared to fiscal 2010, the fiscal 2011 effective tax rate was primarily impacted by a net tax benefit related
to the release of a tax valuation allowance (reserve) on certain deferred tax assets which were determined to be realizable (discussed
further below) and, to a lesser extent, net favorable tax audit settlements, partially offset by changes to existing tax positions.
Excluding the benefit related to the release of the tax valuation allowance, the effective tax rate for fiscal 2011 would have been
30.6%.
56
Years Ended
July 2,
July 3,
June 27,
2011
2010
2009
(Thousands)
Current:
Federal
$
64,476
$
61,892
$
69,835
State and local
11,724
9,789
7,689
Foreign
109,731
56,608
50,007
Total current taxes
185,931
128,289
127,531
Deferred:
Federal
41,029
24,251
(55,743
)
State and local
5,273
1,290
(5,250
)
Foreign
(30,336
)
20,883
(31,794
)
Total deferred taxes
15,966
46,424
(92,787
)
Provision for income taxes
$
201,897
$
174,713
$
34,744
Years Ended
July 2,
July 3,
June 27,
2011
2010
2009
Federal statutory rate
35.0
%
35.0
%
(35.0
)%
State and local income taxes, net of federal benefit
1.5
1.2
0.3
Foreign tax rates, net of valuation allowances
(5.3
)
(6.6
)
(2.0
)
Release of valuation allowance, net of U.S. tax expense (as discussed below)
(7.4
)
—
—
Change in contingency reserves
1.4
2.6
1.1
Tax audit settlements
(0.4
)
(1.6
)
(2.9
)
Impairment charges
—
—
41.9
Other, net
(1.6
)
(0.7
)
(0.2
)
Effective tax rate
23.2
%
29.9
%
3.2
%