Avnet 2015 Annual Report Download - page 30

TableofContents
Gain on Legal Settlement
During fiscal 2014, the Companyreceived award payments and recognized a gain on legal settlement of$22.1 million 
beforetax,$13.5millionaftertaxand$0.09pershareonadilutedbasis.
Income Tax Expense
Avnet’seffectivetaxrateonincomebeforeincometaxeswas24.5%infiscal2016ascomparedwithaneffectivetaxrateof
19.8% in fiscal 2015. Included in the fiscal 2016 effective tax rate is a net tax benefit of $15.1 million, whichis comprised
primarily of (i) a tax benefit of $9.2 million for the release of a valuation allowance against deferred tax assets that were
determined to be realizable, and (ii) a net tax benefit of $9.5 million primarily related to favorable audit settlements, and the
expirationofstatutesoflimitation.Thefiscal2016effectivetaxrateishigherthanthefiscal2015effectivetaxrateprimarilydue
toalessertaxbenefitfromthevaluationallowancereleasedinfiscal2016ascomparedwiththeamountreleasedinfiscal2015.
Avnet’seffectivetaxrateonincomebeforeincometaxeswas19.8%infiscal2015ascomparedwithaneffectivetaxrateof
22.2%infiscal2014.Includedinthefiscal2015effectivetaxrateisanettaxbenefitof$55.1million,whichiscomprised
primarilyof(i)anettaxbenefitof$51.6millionforthereleaseofvaluationallowancesagainstdeferredtaxassetsthatwere
determinedtoberealizable,relatedtoalegalentityinEMEA,and(ii)anettaxbenefitof$16.2millionprimarilyrelatedto
favorable audit settlements, partially offset by $7.6 million of tax expense primarily related to the establishment of valuation
allowances.Thefiscal2015effectivetaxrateislowerthanthefiscal2014effectivetaxrateprimarilyduetoagreatertax
benefitfromthevaluationallowancereleasedinfiscal2015ascomparedwiththeamountreleasedinfiscal2014,partiallyoffset
byloweramountoftaxbenefitsfromauditsettlementsinfiscal2015ascomparedtofiscal2014.
Avnet’seffective tax rate isprimarily afunctionofthe tax rates inthe numerousjurisdictions inwhichitdoes business
applied to the mix of income before taxes.  The effective tax rate may vary year over year as a result of changes in tax
requirements in these jurisdictions, management’s evaluation of its ability to recognize its net deferred tax assets and the
establishmentofliabilitiesforunfavorableoutcomesoftaxpositionstakenoncertainmattersthatarecommontomultinational
enterprisesandtheactualoutcomeofthosematters,includingtheeliminationofexistingliabilitiesforfavorableoutcomesoftax
positionsortheexpirationofstatutesoflimitationsrelatedtosuchliabilities.
SeeNote9,“Incometaxes”totheCompany’sconsolidatedfinancialstatementsincludedinItem15ofthisAnnualReport
onForm10-Kforadditionalinformationrelatedtoincometaxesandvaluationallowances.
Net Income
AsaresultofthefactorsdescribedintheprecedingsectionsofthisMD&A,theCompany’snetincomeinfiscal2016was
$506.5million,or$3.80pershareonadilutedbasis,comparedwithnetincomeof$571.9million,or$4.12pershareonadiluted
basis,infiscal2015and$545.6million,or$3.89pershareonadilutedbasis,infiscal2014.
Liquidity and Capital Resources
Cash Flows
CashFlowsfromOperatingActivities
TheCompanygenerated$224.3millionofcashfromitsoperatingactivitiesinfiscal2016ascomparedtoacashgeneration
of$583.9millioninfiscal2015.Theseoperatingcashflowsarecomprisedof:(i)cashflowsgeneratedfrom
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