Anixter International Inc. Financial Statement Analysis
ANIXTER INTERNATIONAL INC.
Deferred Tax Assets
At January 3, 2020 and December 28, 2018, our valuation allowance for deferred tax assets was $38.3 million and $79.1
million, respectively. We maintain valuation allowances to reduce deferred tax assets if it is more likely than not that some
portion or all of the deferred tax asset will not be realized. Changes in valuation allowances are included in our tax provision in
the period of change. In determining whether a valuation allowance is warranted, management evaluates factors such as prior
earnings history, expected future earnings, carryback and carryforward periods and tax strategies that could potentially enhance
the likelihood of realization of a deferred tax asset. Assessments are made at each balance sheet date to determine how much of
each deferred tax asset is realizable. These estimates are subject to change in the future, particularly if earnings of a particular
subsidiary are significantly higher or lower than expected, or if management takes operational or tax planning actions that could
impact the future taxable earnings of a subsidiary.
Uncertain Tax Positions
In the normal course of business, we are audited by federal, state and foreign tax authorities, and are periodically
challenged regarding the amount of taxes due. These challenges relate primarily to the timing and amount of deductions and the
allocation of income among various tax jurisdictions. Management believes our tax positions comply with applicable tax law
and we intend to defend our positions. We recognize the benefit of tax positions when a benefit is more likely than not (i.e.,
greater than 50% likely) to be sustained on its technical merits. Recognized tax benefits are measured at the largest amount that
is more likely than not to be sustained, based on cumulative probability, in final settlement of the position. Our effective tax rate
in a given period could be impacted if, upon final resolution with taxing authorities, we prevail on positions for which
unrecognized tax benefits have been accrued, or are required to pay amounts in excess of accrued unrecognized tax benefits.
As of January 3, 2020, the aggregate amount of global uncertain unrecognized tax benefits and related interest and
penalties recorded was approximately $3.0 million. The uncertain tax positions cover a range of issues, including intercompany
charges and withholding taxes, and involve various taxing jurisdictions.
New Accounting Pronouncements
For information about recently issued accounting pronouncements, see Note 1. "Summary of Significant Accounting
Policies" in the Notes to our Consolidated Financial Statements.
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