Avnet 2014 Annual Report Download - page 63

Table of Contents AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Estimated liabilities for unrecognized tax benefits are included in “accrued expenses and other” and “other liabilities”
on the
consolidated balance sheets. These contingent liabilities 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 in such liabilities during fiscal 2014
is
primarily due to favorable audit settlements, which are included in the “reductions for tax positions taken in prior periods”
caption in the
following table. As of June 28, 2014 , unrecognized tax benefits were $128.2 million , of which approximately $112.2 million
, if recognized,
would favorably impact the effective tax rate and the remaining balance would be substantially offset by valuation allowances. As of
June 29,
2013 , unrecognized tax benefits were $123.9 million , of which approximately $117.7 million
, if recognized, would favorably impact the
effective tax rate, and the remaining balance would be substantially offset by valuation allowances. The estimated liability for unrecognized tax
benefits included accrued interest expense and penalties of $25.3 million and $25.0 million
, net of applicable state tax benefit, as of the end of
fiscal 2014 and 2013 , respectively.
Reconciliations of the beginning and ending liability balances for unrecognized tax benefits are as follows:
The evaluation of income tax positions requires management to estimate the ability of the Company to sustain its position and estimate the
final benefit to the Company. To the extent that these estimates do not reflect the actual outcome there could be an impact on the consolidated
financial statements in the period in which the position is settled, the applicable statutes of limitations expire or new information becomes
available as the impact of these events are recognized in the period in which they occur. It is difficult to estimate the period in which the amount
of a tax position will change as settlement may include administrative and legal proceedings whose timing the Company cannot control. The
effects of settling tax positions with tax authorities and statute expirations may significantly impact the estimate for unrecognized tax benefits.
Within the next twelve months, management estimates that approximately $21.5 million
of these liabilities for unrecognized tax benefits will be
settled by the expiration of the statutes of limitations or through through agreement with the tax authorities for tax positions related to valuation
matters and positions related to acquired entities; such matters are common to multinational companies. The expected cash payment related to
the settlement of these contingencies is $7.8 million .
The Company conducts business globally and consequently files income tax returns in numerous jurisdictions including those listed in the
following table. It is also routinely subject to audit in these and other countries. The Company is no longer subject to audit in its major
jurisdictions for periods prior to fiscal year 2008. The years remaining subject to audit, by major jurisdiction, are as follows:
10. Pension and retirement plans
Pension Plan
The Company’s noncontributory defined benefit pension plan (the “Plan”)
covers substantially all domestic employees. Employees are
eligible to participate in the Plan following the first year of service during which they worked at least 1,000
hours. The Plan provides defined
benefits pursuant to a cash balance feature whereby a participant accumulates a benefit based upon a
60
June 28, 2014
June 29, 2013
(Thousands)
Balance at beginning of year
$
123,930
$
146,626
Additions for tax positions taken in prior periods, including interest
15,966
11,732
Reductions for tax positions taken in prior periods, including interest
(880
)
(33,776
)
Additions for tax positions taken in current period
8,364
7,445
Reductions related to settlements with taxing authorities
(14,250
)
(9,064
)
Reductions related to the lapse of applicable statutes of limitations
(7,571
)
(2,812
)
Adjustments related to foreign currency translation
2,662
3,779
Balance at end of year
$
128,221
$
123,930
Jurisdiction Fiscal Year
United States (federal and state)
2012 -
2014
Belgium 2010 -
2014
Germany, Taiwan and United Kingdom 2009 -
2014
Netherlands, Singapore and Hong Kong 2008 -
2014