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Income Taxes | 12 Months Ended
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Sep. 28, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The reconciliation of the provision for income taxes to the amount computed by applying the U.S. federal statutory tax rate to earnings before income taxes is as follows:
|  | 2024 |  | 2023 |  | 2022
Earnings before income taxes: |  |  |  |  |  |
Domestic |  | $ | 179,746 |  |  | $ | 136,080 |  |  | $ | 151,870 |
Foreign |  | 88,067 |  |  | 79,972 |  |  | 51,109 |
Total |  | $ | 267,813 |  |  | $ | 216,052 |  |  | $ | 202,979 |
Federal statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |
Impacts of Tax Act |  | (1.2) | % |  | (0.8) | % |  | (0.4) | %
Withholding taxes |  | 1.1 | % |  | 0.4 | % |  | 0.6 | %
Reversal of indefinite reinvestment assertion |  | (0.2) | % |  | 0.5 | % |  | — | %
R&D and foreign tax credits |  | (4.4) | % |  | (6.4) | % |  | (5.4) | %
Divestiture impacts |  | 0.5 | % |  | — | % |  | 2.3 | %
Foreign tax rates |  | 2.8 | % |  | 6.8 | % |  | 4.5 | %
Equity-based compensation |  | (0.8) | % |  | (0.3) | % |  | (0.2) | %
Unrecognized tax benefits |  | — | % |  | (0.5) | % |  | 0.4 | %
Limit on compensation deduction |  | 0.7 | % |  | 0.5 | % |  | 0.2 | %
Change in valuation allowance for deferred taxes |  | 1.7 | % |  | (0.8) | % |  | (2.3) | %
State taxes, net of federal benefit |  | 0.7 | % |  | 0.1 | % |  | 1.9 | %
Other |  | 0.7 | % |  | 0.4 | % |  | 1.0 | %
Effective income tax rate |  | 22.6 | % |  | 20.9 | % |  | 23.6 | %
Our accounting policy is to treat tax on the Global Intangible Low-Tax Income ("GILTI") as a current period cost included in tax expense the year incurred. As such, we don't measure the impact of the GILTI in our determination of deferred taxes. In 2024, we recorded $2,181 of GILTI tax and received a benefit of $4,030 related to the Foreign-Derived Intangible Income deduction. In 2024, we also recorded a tax benefit for provision to return adjustments of $2,309 primarily related to domestic research and development tax credits. In addition, we recorded a current year expense of $2,439 for a total accrual of $9,556 for taxes on undistributed earnings not considered permanently reinvested. During 2024, 2023 and 2022, we repatriated available unremitted earnings from various foreign subsidiaries that were previously taxed under the Tax Act of $37,259, $39,156 and $37,986, respectively. We no longer indefinitely reinvest unremitted earnings and therefore we record a liability related to the remaining unremitted earnings generated by the foreign subsidiaries in the current year. We continue to be permanently invested in outside basis differences other than the unremitted earnings as we have no plans to liquidate or sell those foreign subsidiaries. The components of income taxes are as follows:
|  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
Federal |  | $ | 51,769 |  |  | $ | 41,714 |  |  | $ | 6,270 |
Foreign |  | 31,816 |  |  | 32,269 |  |  | 26,730 |
State |  | 8,743 |  |  | 6,602 |  |  | 3,063 |
Total current |  | 92,328 |  |  | 80,585 |  |  | 36,063 |
Deferred: |  |  |  |  |  |
Federal |  | (31,222) |  |  | (30,756) |  |  | 8,076 |
Foreign |  | 2,776 |  |  | 629 |  |  | 1,742 |
State |  | (3,289) |  |  | (5,404) |  |  | 1,921 |
Total deferred |  | (31,735) |  |  | (35,531) |  |  | 11,739 |
Income taxes |  | $ | 60,593 |  |  | $ | 45,054 |  |  | $ | 47,802 |
Realization of deferred tax assets is dependent, in part, upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income, tax planning strategies, carryback opportunities and reversal of existing deferred tax liabilities in making its assessment of the recoverability of deferred tax assets. The tax effects of temporary differences that generated deferred tax assets and liabilities are as follows:
|  | September 28, 2024 |  | September 30, 2023
Deferred tax assets: |  |  |  |
Research and development |  | $ | 64,530 |  |  | $ | 41,118 |
Benefit accruals |  | 54,667 |  |  | 59,738 |
Inventory reserves |  | 28,796 |  |  | 28,301 |
Tax benefit carryforwards |  | 18,034 |  |  | 7,897 |
Contract reserves not currently deductible |  | 15,898 |  |  | 10,467 |
Lease liability |  | 16,063 |  |  | 16,342 |
Other accrued expenses |  | 2,835 |  |  | 6,212 |
Total gross deferred tax assets |  | 200,823 |  |  | 170,075 |
Less valuation allowance |  | (10,905) |  |  | (6,430) |
Total net deferred tax assets |  | $ | 189,918 |  |  | $ | 163,645 |
Deferred tax liabilities: |  |  |  |
Differences in bases and depreciation of property, plant and equipment |  | $ | 178,868 |  |  | $ | 170,284 |
Pension |  | 17,797 |  |  | 22,238 |
Total gross deferred tax liabilities |  | 196,665 |  |  | 192,522 |
Net deferred tax liabilities |  | $ | (6,747) |  |  | $ | (28,877) |
Deferred tax assets and liabilities are reported in separate captions on the Consolidated Balance Sheets. At September 28, 2024, foreign tax loss carryforwards total $25,544 with expirations ranging from 2024 to 2028. We have $1,008 of federal tax credit carryforward with expirations of 2031, 2033 and 2034 and $10,594 state tax credit carryforward with expirations of 2027 to indefinite life. The change in the valuation allowance relates to tax benefit carryforwards that were utilized or expired during 2024 and credits that were generated in 2024 but will likely not be used before expiration. Effective for 2023, the Tax Cuts and Jobs Act ("TCJA") of 2017 requires taxpayers to capitalize and amortize research and development costs pursuant to IRC Section 174. Domestic expenses are amortized over a 5 year period and foreign over a 15 year period. As a result of the TCJA, a deferred tax asset was established beginning in 2023 and is reflected in the table above. We record unrecognized tax benefits as liabilities and we adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Further, we record interest and penalties related to unrecognized tax benefits in income tax expense. As of October 1, 2022, our uncertain tax positions totaled $1,072. However, in 2023, we recorded a $1,072 benefit for the reversal of this position as a result of updated guidance. As of September 30, 2023 and September 28, 2024 we have no uncertain tax positions. We are subject to income taxes in the U.S. and in various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require the application of significant judgment. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities in significant jurisdictions for tax years before 2021. The statute of limitations in several jurisdictions will expire in the next twelve months and we will have no unrecognized tax benefits recognized if the statute of limitations expires without the relevant taxing authority examining the applicable returns. In October 2021, the Organization for Economic Cooperation and Development ("OECD") passed Pillar Two, an inclusive framework on Base Erosion and Profit Sharing, which would enact a minimum 15% tax for large multinational companies. Many countries are considering changes to their tax laws or proposing new tax laws to align with the recommendations that have been made by the OECD regarding Pillar Two. We are closely monitoring developments and evaluating the impacts that Pillar Two will have on the effective tax rate, including the qualification for safe harbor.

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