Microsoft 2015 Annual Report Download - page 70

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The aggregate changes in the balance of unrecognized tax benefits were as follows:
(In millions)
Y
ear Ended June 30, 2015
2014 2013
Balance, beginning of year $ 8,714 $ 8,648 $ 7,202
Decreases related to settlements (50 ) (583) (30)
Increases for tax positions related to the current year 1,091 566 612
Increases for tax positions related to prior years 94 217 931
Decreases for tax positions related to prior years (144 ) (95) (65)
Decreases due to lapsed statutes of limitations (106 ) (39) (2)
Balance, end of year $9,599 $ 8,714 $8,648
During the third quarter of fiscal year 2011, we reached a settlement of a portion of an I.R.S. audit of tax years 2004
to 2006, which reduced our income tax expense by $461 million. While we settled a portion of the I.R.S. audit, we
remain under audit for these years. In February 2012, the I.R.S. withdrew its 2011 Revenue Agents Report and
reopened the audit phase of the examination. As of June 30, 2015, the primary unresolved issue relates to transfer
pricing, which could have a significant impact on our consolidated financial statements if not resolved favorably. We
believe our allowances for income tax contingencies are adequate. We have not received a proposed assessment for
the unresolved issues and do not expect a final resolution of these issues in the next 12 months. Based on the
information currently available, we do not anticipate a significant increase or decrease to our tax contingencies for
these issues within the next 12 months. We also continue to be subject to examination by the I.R.S. for tax years
2007 to 2015.
We are subject to income tax in many jurisdictions outside the U.S. Our operations in certain jurisdictions remain
subject to examination for tax years 1996 to 2015, some of which are currently under audit by local tax authorities.
The resolutions of these audits are not expected to be material to our consolidated financial statements.
NOTE 14 — RESTRUCTURING CHARGES
Phone Hardware Integration
In July 2014, we announced a restructuring plan to simplify our organization and align NDS with our company’s
overall strategy (the “Phone Hardware Integration Plan”). Pursuant to the Phone Hardware Integration Plan, we
eliminated approximately 19,000 positions in fiscal year 2015, including approximately 13,000 professional and
factory positions related to the NDS business. The actions associated with the Phone Hardware Integration Plan
were completed as of June 30, 2015.
In connection with the Phone Hardware Integration Plan, we incurred restructuring charges of $1.3 billion during
fiscal year 2015, including severance expenses and other reorganization costs, primarily associated with our facilities
consolidation and write-downs of certain assets.
Phone Hardware Restructuring
In June 2015, management approved a plan to restructure our Phone Hardware business to better focus and align
resources (the “Phone Hardware Restructuring Plan”), under which we will eliminate up to 7,800 positions in fiscal
year 2016. In connection with the Phone Hardware Restructuring Plan, we recorded restructuring charges of $780
million during fiscal year 2015, including severance expenses and other reorganization costs, primarily related to
contractual obligations. The actions associated with the Phone Hardware Restructuring Plan are expected to be
completed as of June 30, 2016.
Restructuring charges associated with each plan were included in impairment, integration, and restructuring
expenses in our consolidated income statement, and reflected in Corporate and Other in our table of operating
income (loss) by segment group in Note 22 – Segment Information and Geographic Data.