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Income Taxes
12 Months Ended
Sep. 30, 2011
Income Taxes 
Income Taxes

9. Income Taxes

The following table presents the components of our consolidated income tax expense for each of the last three fiscal years (in thousands):

 

                         
     2011     2010     2009  

Current income tax expense:

                         

Federal

    $ 102,903      $ 123,154      $ 146,865   

State

      25,067        23,477        30,137   

Foreign

      37,617        22,909        42,597   
    

 

 

    

 

 

    

 

 

  

Total current tax expense

      165,587        169,540        219,599   
    

 

 

    

 

 

    

 

 

  

Deferred income tax expense (benefit):

                         

Federal

      10,482        (19,518 )      (733 ) 

State

      (1,760 )      (675 )      397   

Foreign

      7,131        (3,700 )      5,656   
    

 

 

    

 

 

    

 

 

  

Total deferred tax expense (benefit)

      15,853        (23,893 )      5,320   
    

 

 

    

 

 

    

 

 

  

Consolidated income tax expense

    $ 181,440      $ 145,647      $ 224,919  
    

 

 

    

 

 

    

 

 

  

Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. Deferred tax assets and liabilities are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The following table presents the components of our net deferred tax assets at September 30, 2011 and October 1, 2010 (in thousands):

 

                 
     2011     2010  

Deferred tax assets:

                 

Obligations relating to:

                 

Defined benefit pension plans

    $ 80,632      $ 108,826   

Other employee benefit plans

      151,855        137,810   

Self-insurance programs

      14,999        19,481   

Contract revenues and costs

      15,333        13,602   

Foreign tax credits carryforward

      320        14,305   

Other

      9,081        10,719   
    

 

 

    

 

 

  

Gross deferred tax assets

      272,220        304,743   
    

 

 

    

 

 

  

Deferred tax liabilities:

                 

Depreciation and amortization

      (130,536 )      (81,693 ) 

Other, net

      (7,068 )      (792 ) 
    

 

 

    

 

 

  

Gross deferred tax liabilities

      (137,604 )      (82,485 ) 
    

 

 

    

 

 

  

Net deferred tax assets

    $ 134,616      $ 222,258   
    

 

 

    

 

 

  

The following table presents the income tax benefits realized from the exercise of nonqualified stock options, and disqualifying dispositions of stock sold under our employee stock purchase plans during each of the last three fiscal years (in millions):

 

                         
     2011      2010      2009  

Income tax benefits realized under stock plans

    $ 11.9       $ 4.0       $ 4.7   

 

The following table reconciles total income tax expense using the statutory U.S. federal income tax rate to the consolidated income tax expense shown in the accompanying Consolidated Statements of Earnings for each of the last three fiscal years (dollars in thousands):

 

                         
     2011     2010     2009  

Statutory amount

    $ 180,831      $ 137,177      $ 218,446   

State taxes, net of the federal benefit

      15,150        14,821        19,848   

Utilization of foreign tax credit carryover

      —          —          (5,856 ) 

Tax differential on foreign earnings

      (7,841 )      (7,178 )      (9,838 ) 

Other, net

      (6,700 )      827        2,319   
    

 

 

    

 

 

    

 

 

  

Consolidated income tax expense

    $ 181,440     $ 145,647     $ 224,919  
    

 

 

    

 

 

    

 

 

  

Rates used to compute statutory amount

      35.0 %      35.0 %      35.0 % 
    

 

 

    

 

 

    

 

 

  

Consolidated effective income tax rate

      35.1 %      37.2 %      36.0 % 
    

 

 

    

 

 

    

 

 

  

The following table presents income tax payments made during each of the last three fiscal years (in millions):

 

                         
     2011      2010      2009  

Income tax payments

    $ 139.2       $ 170.8       $ 255.5   

The following table presents the components of our consolidated earnings before taxes for each of the last three fiscal years (in thousands):

 

                         
     2011      2010      2009  

United States earnings

    $ 341,059       $ 295,144       $ 449,065   

Foreign earnings

      175,602         96,790         175,067   
    

 

 

     

 

 

     

 

 

  
     $ 516,661       $ 391,934       $ 624,132   
    

 

 

     

 

 

     

 

 

  

United States income taxes, net of applicable credits, have been provided on the undistributed earnings of the Company's foreign subsidiaries, except in those instances where the earnings are expected to be permanently reinvested. At September 30, 2011, approximately $26.1 million of such undistributed earnings of certain foreign subsidiaries was expected to be permanently reinvested. Should these earnings be repatriated, approximately $7.4 million of income taxes would be payable.

The Company accounts for unrecognized tax benefits in accordance with FASB's Accounting Standards Codification 740. It accounts for interest and penalties on unrecognized tax benefits as interest and penalties (i.e., not as part of income tax expense). The Company's liability for gross unrecognized tax benefits was $31.1 million and $27.8 million at September 30, 2011 and October 1, 2010, respectively, all of which, if recognized, would affect the Company's consolidated effective income tax rate. The Company had $4.0 million and $4.4 million in accrued interest and penalties at September 30, 2011 and October 1, 2010, respectively. The Company estimates that, within 12 months, $4.5 million of gross, primarily non-U.S. unrecognized tax benefits will reverse due to the anticipated expiration of time to assess tax. As of September 30, 2011, the Company's U.S. federal income tax returns for tax years 2008 through 2011 remain subject to examination.