Anixter International Inc. Financial Statement Analysis
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Undistributed Earnings: Undistributed earnings of Anixter's foreign subsidiaries amounted to approximately $680.0
million at January 3, 2020. The Act converted the U.S. system of taxing foreign earnings from a worldwide system to a
territorial system. Future distributions of foreign earnings by Anixter affiliates abroad will no longer result in U.S. taxation. In
converting to a territorial system the Act levied a one-time transition tax on deferred foreign earnings as of 2017. Anixter has
calculated the net combined U.S. tax impact on this deemed repatriation to be approximately $47.2 million and plans to elect to
pay the federal portion of this tax liability in installments over eight years. Despite the conversion to a territorial system,
Anixter considers the undistributed earnings of its foreign subsidiaries to be indefinitely reinvested. Upon distribution of those
earnings in the form of dividends or otherwise, Anixter may be subject to withholding taxes payable to the various foreign
countries. With respect to the countries that have undistributed earnings as of January 3, 2020, according to the foreign laws
and treaties in place at that time, estimated foreign jurisdiction withholding taxes of approximately $37.6 million would be
payable upon the remittance of all earnings at January 3, 2020.
Deferred Income Taxes: Significant components of the Company's deferred tax assets (liabilities) included in "Other
assets" and "Other liabilities" on the Consolidated Balance Sheets were as follows:
(In millions)
Deferred compensation and other postretirement benefits
Foreign NOL carryforwards and other
Operating lease obligations
Accrued expenses and other
Inventory reserves
Unrealized foreign exchange
Allowance for doubtful accounts
Federal and state credits
Gross deferred tax assets
Property, equipment, intangibles and other
Operating lease assets
Gross deferred tax liabilities
Deferred tax assets, net of deferred tax liabilities
Valuation allowance
Net deferred tax assets (liabilities)
January 3,
2020
December 28,
2018
$
38.4 $
36.0
26.1
28.1
67.6
1.6
9.1
8.4
8.7
8.5
0.5
2.7
6.5
7.9
54.5
50.6
$
211.4 $
143.8
(74.8)
(90.1)
(66.5)
$
(141.3) $
(90.1)
70.1
53.7
(38.3)
(79.1)
S
31.8 $
(25.4)
Uncertain Tax Positions and Jurisdictions Subject to Examinations: A reconciliation of the beginning and ending amount
of unrecognized tax benefits for fiscal 2017, 2018 and 2019 is as follows:
(In millions)
Balance at December 30, 2016
Reductions for tax positions of prior years
Balance at December 29, 2017
Additions for tax positions of prior years
Reductions for tax positions of prior years
Balance at December 28, 2018
Additions for tax positions of prior years
5.0
(0.3)
$
4.7
0.6
(0.6)
4.7
0.1
(2.6)
$
2.2
Reductions for tax positions of prior years
Balance at January 3, 2020
Interest and penalties accrued for unrecognized tax benefits were $0.2 million in 2019, 2018 and 2017. The Company
estimates that of the unrecognized tax benefit balance of $2.2 million, all of which would affect the effective tax rate, $0.2
million may be resolved in a manner that would impact the effective rate within the next twelve months. The reserves for
uncertain tax positions, including interest and penalties, of $3.0 million cover a range of issues, including intercompany charges
and withholding taxes, and involve various taxing jurisdictions.
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