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Income Taxes | 12 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income before income taxes, by geographic area, was as follows:
| Fiscal Year Ended
| September 30, 2018 |  | October 1, 2017 |  | October 2, 2016
| (in thousands)
Income before income taxes: |  |  |  |  |  |  |  |
United States | $ | 180,034 |  |  | $ | 166,074 |  |  | $ | 113,576 |
Foreign | (5,472 | ) |  | 5,687 |  |  | 10,890 |
Total income before income taxes | $ | 174,562 |  |  | $ | 171,761 |  |  | $ | 124,466 |
Income tax expense consisted of the following:
| Fiscal Year Ended
| September 30, 2018 |  | October 1, 2017 |  | October 2, 2016
|  |  | (in thousands) |  |
Current: |  |  |  |  |  |  |  |
Federal | $ | 46,840 |  |  | $ | 45,604 |  |  | $ | 22,277 |
State | 9,228 |  |  | 8,860 |  |  | 5,634 |
Foreign | 10,897 |  |  | 9,337 |  |  | 6,651 |
Total current income tax expense | 66,965 |  |  | 63,801 |  |  | 34,562 |
Deferred: |  |  |  |  |  |  |  |
Federal | (22,072 | ) |  | (4,251 | ) |  | 6,231 |
State | (1,471 | ) |  | (945 | ) |  | (16 | )
Foreign | (5,817 | ) |  | (4,761 | ) |  | (164 | )
Total deferred income tax expense | (29,360 | ) |  | (9,957 | ) |  | 6,051 |
Total income tax expense | $ | 37,605 |  |  | $ | 53,844 |  |  | $ | 40,613 |
Total income tax expense was different from the amount computed by applying the U.S. federal statutory rate to pre-tax income as follows:
| Fiscal Year Ended
| September 30, 2018 |  | October 1, 2017 |  | October 2, 2016
Tax at federal statutory rate | 24.5% |  | 35.0% |  | 35.0%
State taxes, net of federal benefit | 4.2 |  | 3.4 |  | 3.1
Research and Development ("R&D") credit | (1.4) |  | (1.8) |  | (3.4)
Domestic production deduction | (0.2) |  | (0.7) |  | (0.7)
Tax differential on foreign earnings | 0.5 |  | — |  | (1.6)
Non-taxable foreign interest income | (2.0) |  | (2.9) |  | (3.9)
Non-deductible executive compensation | — |  | — |  | 2.0
Goodwill | 1.7 |  | — |  | —
Stock compensation | (2.7) |  | (2.8) |  | 0.3
Valuation allowance | (0.5) |  | (0.5) |  | 2.4
Change in uncertain tax positions | 1.9 |  | 1.8 |  | (2.0)
Revaluation of deferred taxes | (8.4) |  | — |  | —
Deferred tax adjustments | 2.1 |  | — |  | —
Other | 1.8 |  | (0.2) |  | 1.4
Total income tax expense | 21.5% |  | 31.3% |  | 32.6%
The effective tax rates for fiscal 2018 and 2017 were 21.5% and 31.3%, respectively. The fiscal 2018 tax rate reflects the impact of the comprehensive tax legislation enacted by the U.S. government on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act (“TCJA”). The TCJA significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, while also repealing the deduction for domestic production activities, limiting the deductibility of certain executive compensation, and implementing a modified territorial tax system. The TCJA also imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries. We analyzed this provision of the TCJA and our related foreign earnings accumulated under legacy tax laws during fiscal 2018. Based on our analysis of tax earnings and profits and tax deficits at the prescribed measurement dates, we have a cumulative net tax deficit and do not believe we have any tax liability related to this tax. As we have a September 30 fiscal year-end, our U.S. federal corporate income tax rate was blended in fiscal 2018, resulting in a statutory federal rate of approximately 24.5% (3 months at 35% and 9 months at 21%), and will be 21% for subsequent fiscal years. GAAP requires that the impact of tax legislation be recognized in the period in which the tax law was enacted. As a result of the TCJA, we reduced our deferred tax liabilities and recorded a one-time deferred tax benefit of approximately $14.7 million in fiscal 2018 to reflect our estimate of temporary differences in the United States that will be recovered or settled in fiscal 2018 based on the 24.5% blended corporate tax rate or based on the 21% tax rate in fiscal 2019 and beyond versus the previous enacted 35% corporate tax rate. In fiscal 2018, we recognized other non-recurring adjustments to our deferred tax assets and liabilities that resulted in a net deferred tax expense of $3.6 million. Excluding these net deferred tax benefits, our effective tax rate in fiscal 2018 was 27.9%. The one-time revaluation of our deferred tax liabilities and our estimate of the one-time transition tax on foreign earnings are both preliminary and subject to adjustment as we refine the information necessary to record the final values. The provisional amounts incorporate assumptions made based on our current interpretation of the TCJA and may change as we receive additional clarification on the implementation guidance. Additionally, in order to complete the valuation of our deferred tax liabilities, additional information related to the timing of the recovery or settlement of our deferred tax assets and liabilities and the effective tax rates (including state tax rates) that will apply needs to be obtained and analyzed. Similarly, information related to the computation of our foreign earnings and profits subject to the one-time transition tax requires further analysis before we make a final determination that we have no related liability. The U.S. Securities and Exchange Commission (“SEC”) has issued rules that would allow for a measurement period of up to one year after the enactment date of the TCJA to finalize the recording of the related tax impacts. We will finalize and record any resulting adjustments by the end of the first quarter of fiscal 2019. The fiscal 2018 divestitures of our non-core utility field services operations and other non-core assets resulted in a pre-tax loss of $3.4 million and incremental tax expense of $2.6 million due to a book/tax basis difference primarily related to the $12.2 million of associated goodwill. In fiscal 2018, the Internal Revenue Service ("IRS") concluded their examination for fiscal years 2014 through 2016 and other state examinations were also completed. As a result, we recognized a net $1.6 million tax expense in fiscal 2018, and we made payments to the IRS of approximately $7.6 million. In fiscal 2017, the IRS concluded their examination for fiscal years 2010 through 2013. As a result, we recognized a $1.2 million tax benefit in and we made payments to the IRS of approximately $21.5 million in fiscal 2017 that represented the acceleration of a deferred tax liability. In fiscal 2017, we also recognized a tax expense of $2.3 million to establish a reserve for an international tax position that is under examination. Excluding these discrete amounts from both periods and the one-time impacts of the TCJA, the effective tax rates for fiscal 2018 and 2017 were 25.1% and 30.7%, respectively. Temporary differences comprising the net deferred income tax liability shown on the accompanying consolidated balance sheets were as follows:
| Fiscal Year Ended
| September 30, 2018 |  | October 1, 2017
| (in thousands)
Deferred Tax Assets: |  |  |  |  |
State taxes | $ | 1,220 |  |  | $ | 598 |
Reserves and contingent liabilities | 2,646 |  |  | 2,941 |
Allowance for doubtful accounts | 4,259 |  |  | 4,273 |
Accrued liabilities | 19,611 |  |  | 22,466 |
Stock-based compensation | 6,338 |  |  | 10,069 |
Loss carry-forwards | 23,492 |  |  | 28,261 |
Valuation allowance | (21,479 | ) |  | (25,326 | )
Total deferred tax assets | 36,087 |  |  | 43,282 |
Deferred Tax Liabilities: |  |  |  |  |
Unbilled revenue | (25,819 | ) |  | (46,408 | )
Prepaid expense | (3,524 | ) |  | (6,253 | )
Intangibles | (23,319 | ) |  | (24,328 | )
Property and equipment | (4,984 | ) |  | (8,311 | )
Total deferred tax liability | (57,646 | ) |  | (85,300 | )
Net deferred tax liabilities | $ | (21,559 | ) |  | $ | (42,018 | )
At September 30, 2018, undistributed earnings of our foreign subsidiaries, primarily in Canada, amounting to approximately $11.8 million are expected to be permanently reinvested. Accordingly, no provision for foreign withholding taxes has been made. Upon distribution of those earnings, we would be subject to foreign withholding taxes. Assuming the permanently reinvested foreign earnings were repatriated under the laws and rates applicable at September 30, 2018, the incremental foreign withholding taxes applicable to those earnings would be approximately $1.0 million. At September 30, 2018, we had available unused state net operating loss ("NOL") carry forwards of $43.7 million that expire at various dates from 2023 to 2036; and available foreign NOL carry forwards of $72.4 million, of which $31.4 million expire at various dates from 2023 to 2038, and $41.0 million have no expiration date. We have performed an assessment of positive and negative evidence regarding the realization of the deferred tax assets. This assessment included the evaluation of scheduled reversals of deferred tax liabilities, availability of carrybacks, cumulative losses in recent years, and estimates of projected future taxable income. Although realization is not assured, based on our assessment, we have concluded that it is more likely than not that the assets will be realized except for the assets related to the loss carry-forwards and certain foreign intangibles for which a valuation allowance of $21.5 million has been provided. At September 30, 2018, we had $9.4 million of unrecognized tax benefits, all of which, if recognized, would affect our effective tax rate. It is not expected that there will be a significant change in the unrecognized tax benefits in the next 12 months. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Fiscal Year Ended
| September 30, 2018 |  | October 1, 2017 |  | October 2, 2016
| (in thousands)
Beginning balance | $ | 9,337 |  |  | $ | 22,786 |  |  | $ | 21,618 |
Additions for current year tax positions | 1,108 |  |  | 1,060 |  |  | 2,802 |
Additions for prior year tax positions | 3,478 |  |  | 2,365 |  |  | 1,466 |
Reductions for prior year tax positions | — |  |  | (6,875 | ) |  | (3,100 | )
Settlements | (4,496 | ) |  | (9,999 | ) |  | — |
Ending balance | $ | 9,427 |  |  | $ | 9,337 |  |  | $ | 22,786 |
We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal years 2018 and 2017, we accrued additional interest expense of $0.6 million $0.4 million, respectively, and recorded reductions in accrued interest of $0.3 million and $0.9 million, respectively, as a result of audit settlements and other prior-year adjustments. The amount of interest and penalties accrued at September 30, 2018 and October 1, 2017 was $1.2 million and $1.1 million, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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