Avnet 2012 Annual Report Download - page 58

Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
next twelve months, the Company may record a tax benefit of $30.0 million to $35.0 million
, which would favorably impact the effective tax
rate in the period in which the matter is effectively settled. This estimated benefit is comprised primarily of the recognition of additional net
operating losses as well as the release of related reserves, partially offset by unfavorable audit adjustments.
The significant components of deferred tax assets and liabilities, included primarily in “other assets”
on the consolidated balance sheets,
are as follows:
The change in the valuation allowance from fiscal 2011 to fiscal 2012 was a combination of (i) a reduction of $30,785,000
primarily due to
the previously mentioned release of valuation allowance in EMEA, $26,231,000
of which impacted the effective tax rate while the remainder
was offset in deferred income taxes, and (ii) a decrease of $35,894,000
primarily related to the translation impact of foreign currency exchange
rates.
As of June 30, 2012 , the Company had foreign net operating loss carry-forwards of approximately $1,094,296,000 , of which
$44,225,000
will expire during fiscal 2013 and 2014 , substantially all of which have full valuation allowances, $254,742,000
have expiration dates ranging
from fiscal 2015 to 2032 and the remaining $795,330,000 have no expiration date. The carrying value of the Company’s net operating loss carry-
forwards is dependent upon the Company’
s ability to generate sufficient future taxable income in certain tax jurisdictions. In addition, the
Company considers historic levels of income, expectations and risk associated with estimates of future taxable income and on-
going prudent and
feasible tax planning strategies in assessing a tax valuation allowance.
Accruals for income tax contingencies (or accruals for unrecognized tax benefits) are included in “accrued expenses and other” and “
other
long term liabilities”
on the consolidated balance sheet. These contingency reserves relate to various tax matters that result from uncertainties in
the application of complex income tax regulations in the numerous jurisdictions in which the Company operates. The change to contingency
reserves during fiscal 2012 is primarily due to favorable non-cash audit settlements which are included in the “
reductions for tax positions taken
in prior periods” caption in the following table. As of June 30, 2012 , unrecognized tax benefits were $146,626,000
, of which approximately
$126,933,000
, if recognized, would favorably impact the effective tax rate and the remaining balance would be substantially offset by valuation
allowances. As of July 2, 2011 , unrecognized tax benefits were $175,151,000 , of which approximately $111,299,000
, if recognized, would
favorably impact the effective tax rate, and the remaining balance would be substantially offset by valuation allowances. In accordance with the
Company's accounting policy, accrued interest and penalties, if any, related to unrecognized tax benefits are recorded as a component of income
tax expense. The accrual for unrecognized tax benefits included accrued interest expense and penalties of $24,664,000 and $24,640,000
, net of
applicable state tax benefit, as of the end of fiscal 2012 and 2011 , respectively.
55
June 30,
2012
July 2,
2011
(Thousands)
Deferred tax assets:
Inventory valuation
$
13,298
$
13,680
Accounts receivable valuation
29,984
27,916
Federal, state and foreign tax loss carry-forwards
304,410
394,093
Various accrued liabilities and other
88,792
57,686
436,484
493,375
Less — valuation allowance
(244,093
)
(310,772
)
192,391
182,603
Deferred tax liabilities:
Depreciation and amortization of property, plant and equipment
(54,745
)
(43,302
)
Net deferred tax assets
$
137,646
$
139,301