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TableofContents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Thechangeinvaluationallowancesinfiscal2016fromfiscal2015wasprimarilydueto(i)anetreductionof$7.9million
duetothereleaseofvaluationallowances,(ii)a$4.1milliondecreaseprimarilyduetotaxratechangesonvaluationallowances
previously established in various foreign jurisdictions, and (iii) a $3.4 million increase due to the establishment of valuation
allowances.
AsofJuly2,2016,theCompanyhadforeignnetoperatinglosscarry-forwardsofapproximately$604.2million,ofwhich
$146.3 million will expire during fiscal 2017 and 2018, substantially all of which have full valuation allowances or reserves,
$75.7millionhaveexpirationdatesrangingfromfiscal2019to2036andtheremaining$382.2millionhavenoexpirationdate.
The carrying value of the Company’s foreign net operating loss carry-forwards is dependent upon the Company’s ability to
generatesufficientfuturetaxableincomeincertainforeigntaxjurisdictions.Inaddition,theCompanyconsidershistoriclevelsof
incomeorlosses,expectationsandriskassociatedwithestimatesoffuturetaxableincomeandongoingprudentandfeasibletax
planningstrategiesinassessingtheneedforvaluationallowances.
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2016wasprimarilyduetoreductionsrelatedtothelapseofapplicablestatutesoflimitationsaspresented
inthefollowingtable.AsofJuly2,2016,unrecognizedtaxbenefitswere$101.4million,ofwhichapproximately$70.2million,
ifrecognized,wouldfavorablyimpacttheeffectivetaxrateandtheremainingbalancewouldbesubstantiallyoffsetbyvaluation
allowances. As of June 27, 2015, unrecognized tax benefits were $103.9 million, of which approximately $69.0 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$17.8million
and$22.6million,netofapplicablestatetaxbenefits,asoftheendoffiscal2016and2015,respectively.
Reconciliationsofthebeginningandendingliabilitybalancesforunrecognizedtaxbenefitsareasfollows:
   
 July 2, 2016 June 27, 2015
(Thousands)
Balanceatbeginningofyear  $ 103,923  $ 128,221
Additionsfortaxpositionstakeninpriorperiods,includinginterest   10,217   7,713
Reductionsfortaxpositionstakeninpriorperiods,includinginterest   (5,058)  (17,810)
Additionsfortaxpositionstakenincurrentperiod   8,047   4,233
Reductionsrelatedtosettlementswithtaxingauthorities   (2,471)  (243)
Reductionsrelatedtothelapseofapplicablestatutesoflimitations   (13,073)  (6,028)
Adjustmentsrelatedtoforeigncurrencytranslation  (145) (12,163)
Balanceatendofyear $ 101,440 $ 103,923
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$12.4millionof
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