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Income Taxes | 12 Months Ended
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Oct. 03, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income before income taxes, by geographic area, was as follows:
| Fiscal Year Ended
| October 3, 2021 |  | September 27, 2020 |  | September 29, 2019
| (in thousands)
Income before income taxes: |  |  |  |  |
United States | $ | 211,222 |  |  | $ | 209,443 |  |  | $ | 185,535 |
Foreign | 55,648 |  |  | 18,548 |  |  | (10,399) |
Total income before income taxes | $ | 266,870 |  |  | $ | 227,991 |  |  | $ | 175,136 |
Income tax expense consisted of the following:
| Fiscal Year Ended
| October 3, 2021 |  | September 27, 2020 |  | September 29, 2019
|  |  | (in thousands) |  |
Current: |  |  |  |  |
Federal | $ | 41,056 |  |  | $ | 24,102 |  |  | $ | 30,051 |
State | 9,893 |  |  | 6,872 |  |  | 8,923 |
Foreign | 18,887 |  |  | 20,398 |  |  | 15,016 |
Total current income tax expense | 69,836 |  |  | 51,372 |  |  | 53,990 |
Deferred: |  |  |  |  |
Federal | (6,034) |  |  | 2,187 |  |  | (9,108) |
State | (2,060) |  |  | 870 |  |  | (1,195) |
Foreign | (27,703) |  |  | (328) |  |  | (27,312) |
Total deferred income tax (benefit) expense | (35,797) |  |  | 2,729 |  |  | (37,615) |
Total income tax expense | $ | 34,039 |  |  | $ | 54,101 |  |  | $ | 16,375 |
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
| October 3, 2021 |  | September 27, 2020 |  | September 29, 2019
Tax at federal statutory rate | 21.0% |  | 21.0% |  | 21.0%
State taxes, net of federal benefit | 2.3 |  | 2.7 |  | 3.3
Research and Development ("R&D") credits | (2.6) |  | (2.2) |  | (4.7)
Tax differential on foreign earnings | 0.9 |  | 0.7 |  | 1.0
Non-taxable foreign interest income | (1.0) |  | (1.1) |  | (1.7)
Goodwill | — |  | 1.5 |  | 0.9
Stock compensation | (3.3) |  | (2.2) |  | (2.4)
Valuation allowance | (9.3) |  | 1.6 |  | (13.5)
Change in uncertain tax positions | 1.7 |  | 0.4 |  | 2.4
Return to provision | (3.7) |  | 0.8 |  | (0.2)
Disallowed officer compensation | 2.0 |  | 0.2 |  | 0.2
Cash repatriation | 2.1 |  | — |  | —
Unremitted earnings | 1.0 |  | — |  | —
Revaluation of deferred taxes | — |  | — |  | (1.4)
Deferred tax adjustments | 0.8 |  | (1.3) |  | (0.4)
Transition taxes on foreign earnings | — |  | — |  | 1.4
Other | 0.9 |  | 1.6 |  | 3.4
Total income tax expense | 12.8% |  | 23.7% |  | 9.3%
The effective tax rates for fiscal 2021, 2020 and 2019 were 12.8%, 23.7% and 9.3%, respectively. Our fiscal 2021 and 2019 effective tax rates reflect non-recurring net tax benefits of $21.6 million and $22.3 million, respectively, primarily consisting of valuation allowances in the United Kingdom and Australia that were released due to sufficient positive evidence being obtained in the respective years. The valuation allowances were primarily related to net operating loss and research and development credit carry-forwards and other temporary differences. We evaluated the positive evidence against any negative evidence and determined that it was more likely than not that the deferred tax assets would be realized. The primary factors used to assess the likelihood of realization were the past performance of the related entities and our forecast of future taxable income. The goodwill impairment charges in fiscal 2020 and 2019 and certain of the transaction charges in fiscal 2019 did not have related tax benefits. Also, income tax expense was reduced by $12.9 million, $8.3 million, $6.4 million of excess tax benefits on share-based payments in fiscal 2021, 2020, and 2019, respectively. Excluding the impact of the valuation allowance releases, non-deductible goodwill impairment charges and transaction costs, and the excess tax benefits on share-based payments our effective tax rates in fiscal 2021, 2020, and 2019 were 25.7%, 25.6%, and 24.6% respectively. We are currently under examination by the Internal Revenue Service for fiscal year 2018, the Canada Revenue Agency for fiscal years 2011 through 2016, and the California Franchise Tax Board for fiscal years 2014 through 2016. We are also subject to various other state audits. Temporary differences comprising the net deferred income tax asset shown on the accompanying consolidated balance sheets were as follows:
| Fiscal Year Ended
| October 3, 2021 |  | September 27, 2020
| (in thousands)
Deferred Tax Assets: |  |  |
State taxes | $ | 1,342 |  |  | $ | 1,146 |
Reserves and contingent liabilities | 6,662 |  |  | 6,262 |
Accounts receivable including the allowance for doubtful accounts | 5,917 |  |  | 6,283 |
Accrued liabilities | 41,657 |  |  | 28,223 |
Lease liabilities, operating leases | 60,181 |  |  | 66,941 |
Stock-based compensation | 3,560 |  |  | 5,905 |
Loss carry-forwards | 54,825 |  |  | 43,475 |
Valuation allowance | (13,040) |  |  | (24,395) |
Total deferred tax assets | 161,104 |  |  | 133,840 |
Deferred Tax Liabilities: |  |  |
Unbilled revenue | (5,595) |  |  | (14,451) |
Prepaid expense | (8,136) |  |  | (5,967) |
Right-of-use assets, operating leases | (60,181) |  |  | (66,941) |
Intangibles | (40,121) |  |  | (29,130) |
Undistributed earnings | (3,136) |  |  | — |
Property and equipment | (85) |  |  | (1,615) |
Total deferred tax liabilities | (117,254) |  |  | (118,104) |
Net deferred tax assets | $ | 43,850 |  |  | $ | 15,736 |
In the fourth quarter of fiscal 2021, we repatriated approximately $80 million from Canada and recognized a related tax expense of $5.6 million. At this time, we also determined that our remaining undistributed earnings in Canada of approximately $20.1 million are no longer being indefinitely reinvested and recorded an additional deferred tax liability/expense of $3.1 million. At October 3, 2021, undistributed earnings of our other foreign subsidiaries, primarily in Australia and the U.K. of approximately $50.9 million are expected to be indefinitely reinvested in t hese foreign countries. Accordingly, no provision for foreign withholding taxes has been made. Assuming the indefinitely reinvested foreign earnings were repatriated under the laws and rates applicable at October 3, 2021, the incremental taxes applicable to those earnings would not be material. At October 3, 2021, we had available unused state net operating loss ("NOL") carry forwards of $43.7 million that expire at various dates from 2024 to 2037; and available foreign NOL carry forwards of $165.5 million, of which $14.7 million expire at various dates from 2024 to 2041, and $150.8 million have no expiration date. In addition, we had foreign capital loss carryforwards of $21.5 million and foreign research and development credits of $3.9 million that do not have expiration dates. 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, estimates of projected future taxable income, and tax planning strategies. 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 deferred tax assets related to the loss carry-forwards for which a valuation allowance of $13.0 million has been provided. At October 3, 2021, we had $12.9 million of unrecognized tax benefits, all of which, if recognized, would affect our effective tax rate. It is reasonably possible that the amount of the unrecognized tax benefits with respect to certain of our unrecognized tax positions may significantly decrease in the next 12 months. These changes would be the result of ongoing examinations. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Fiscal Year Ended
| October 3, 2021 |  | September 27, 2020 |  | September 29, 2019
| (in thousands)
Beginning balance | $ | 9,228 |  |  | $ | 9,169 |  |  | $ | 8,328 |
Additions for current year tax positions | 2,171 |  |  | 700 |  |  | 1,342 |
Additions for prior year tax positions | 1,500 |  |  | — |  |  | 356 |
Reductions for prior year tax positions | — |  |  | (641) |  |  | (100) |
Settlements | — |  |  | — |  |  | (757) |
Ending balance | $ | 12,899 |  |  | $ | 9,228 |  |  | $ | 9,169 |
We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal years 2021, 2020 and 2019, we accrued additional interest and penalties of $0.8 million, $0.8 million and $2.6 million, respectively, and recorded reductions in accrued interest and penalties of $0, $0 and $0.2 million, respectively, as a result of audit settlements and other prior-year adjustments. The amount of interest and penalties accrued at October 3, 2021, September 27, 2020 and September 29, 2019 was $5.2 million, $4.4 million and $3.6 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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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