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TableofContents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Thechangeinvaluationallowancesinfiscal2016fromfiscal2015wasprimarilydueto(i)anetreductionof$7.9million
duetothereleaseofvaluationallowances,(ii)a$4.1milliondecreaseprimarilyduetotaxratechangesonvaluationallowances
previously established in various foreign jurisdictions, and (iii) a $3.4 million increase due to the establishment of valuation
allowances.
AsofJuly2,2016,theCompanyhadforeignnetoperatinglosscarry-forwardsofapproximately$604.2million,ofwhich
$146.3 million will expire during fiscal 2017 and 2018, substantially all of which have full valuation allowances or reserves,
$75.7millionhaveexpirationdatesrangingfromfiscal2019to2036andtheremaining$382.2millionhavenoexpirationdate.
The carrying value of the Company’s foreign net operating loss carry-forwards is dependent upon the Company’s ability to
generatesufficientfuturetaxableincomeincertainforeigntaxjurisdictions.Inaddition,theCompanyconsidershistoriclevelsof
incomeorlosses,expectationsandriskassociatedwithestimatesoffuturetaxableincomeandongoingprudentandfeasibletax
planningstrategiesinassessingtheneedforvaluationallowances.
Estimatedliabilities forunrecognizedtaxbenefits areincludedin “accruedexpensesand other”and“other liabilities” on
the consolidated balance sheets. These contingent liabilities relate to various tax matters that result from uncertainties in the
applicationofcomplexincometaxregulationsinthenumerousjurisdictionsinwhichtheCompanyoperates.Thechangeinsuch
liabilitiesduringfiscal2016wasprimarilyduetoreductionsrelatedtothelapseofapplicablestatutesoflimitationsaspresented
inthefollowingtable.AsofJuly2,2016,unrecognizedtaxbenefitswere$101.4million,ofwhichapproximately$70.2million,
ifrecognized,wouldfavorablyimpacttheeffectivetaxrateandtheremainingbalancewouldbesubstantiallyoffsetbyvaluation
allowances. As of June 27, 2015, unrecognized tax benefits were $103.9 million, of which approximately $69.0 million, if
recognized,wouldfavorablyimpacttheeffectivetaxrate,andtheremainingbalancewouldbesubstantiallyoffsetbyvaluation
allowances.Theestimatedliabilityforunrecognizedtaxbenefitsincludedaccruedinterestexpenseandpenaltiesof$17.8million
and$22.6million,netofapplicablestatetaxbenefits,asoftheendoffiscal2016and2015,respectively.
Reconciliationsofthebeginningandendingliabilitybalancesforunrecognizedtaxbenefitsareasfollows:
July 2, 2016 June 27, 2015
(Thousands)
Balanceatbeginningofyear $ 103,923 $ 128,221
Additionsfortaxpositionstakeninpriorperiods,includinginterest 10,217 7,713
Reductionsfortaxpositionstakeninpriorperiods,includinginterest (5,058) (17,810)
Additionsfortaxpositionstakenincurrentperiod 8,047 4,233
Reductionsrelatedtosettlementswithtaxingauthorities (2,471) (243)
Reductionsrelatedtothelapseofapplicablestatutesoflimitations (13,073) (6,028)
Adjustmentsrelatedtoforeigncurrencytranslation (145) (12,163)
Balanceatendofyear $ 101,440 $ 103,923
TheevaluationofincometaxpositionsrequiresmanagementtoestimatetheabilityoftheCompanytosustainitsposition
andestimatethefinalbenefittotheCompany.Totheextentthattheseestimatesdonotreflecttheactualoutcometherecouldbe
an impact on the consolidated financial statements in the period in which the position is settled, the applicable statutes of
limitationsexpireornewinformationbecomesavailableastheimpactoftheseeventsarerecognizedintheperiodinwhichthey
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,managementestimatesthatapproximately$12.4millionof
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