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Income Taxes | 12 Months Ended
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Oct. 02, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The domestic and foreign components of income (loss) before income tax expense for fiscal 2021, 2020 and 2019 were as follows (in thousands):
|  | 2021 |  | 2020 |  | 2019
U.S. (1) |  | $ | (33,409) |  |  | $ | (69,102) |  |  | $ | (42,806) |
Foreign (1) |  | 193,820 |  |  | 204,499 |  |  | 168,761 |
|  | $ | 160,411 |  |  | $ | 135,397 |  |  | $ | 125,955 |
(1) The U.S. and Foreign components of income (loss) before income tax expense include the elimination of intercompany foreign dividends paid to the Company's U.S. operations. Income tax expense (benefit) for fiscal 2021, 2020 and 2019 were as follows (in thousands):
|  | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |  |
Federal |  | $ | 9,217 |  |  | $ | 8,779 |  |  | $ | 15,160 |
State |  | 524 |  |  | 23 |  |  | — |
Foreign |  | 15,146 |  |  | 12,699 |  |  | 11,943 |
|  | 24,887 |  |  | 21,501 |  |  | 27,103 |
Deferred: |  |  |  |  |  |
Federal |  | (1,153) |  |  | (6,498) |  |  | (3,498) |
State |  | 1 |  |  | 3 |  |  | 827 |
Foreign |  | (2,236) |  |  | 2,912 |  |  | (7,093) |
|  | (3,388) |  |  | (3,583) |  |  | (9,764) |
|  | $ | 21,499 |  |  | $ | 17,918 |  |  | $ | 17,339 |
The following is a reconciliation of the federal statutory income tax rate to the effective income tax rates reflected in the Consolidated Statements of Comprehensive Income for fiscal 2021, 2020 and 2019:
|  | 2021 |  | 2020 |  | 2019
Federal statutory income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
(Decrease) increase resulting from: |  |  |  |  |  |
Foreign tax rate differences |  | (20.3) |  |  | (24.0) |  |  | (21.0) |
Withholding tax on dividends |  | 2.9 |  |  | 1.9 |  |  | (5.4) |
Permanent differences |  | (0.6) |  |  | (2.6) |  |  | (1.3) |
Excess tax benefits related to share-based compensation |  | (0.9) |  |  | (3.0) |  |  | (1.3) |
Global intangible low-taxed income ("GILTI") |  | 6.4 |  |  | 13.8 |  |  | 11.7 |
Audit settlements |  | 5.0 |  |  | — |  |  | — |
Non-deductible compensation |  | 3.8 |  |  | 2.2 |  |  | 1.5 |
Valuation allowances |  | (3.7) |  |  | 3.6 |  |  | 1.5 |
Deemed repatriation tax |  | — |  |  | — |  |  | 5.6 |
Other, net |  | (0.2) |  |  | 0.3 |  |  | 1.5 |
Effective income tax rate |  | 13.4 | % |  | 13.2 | % |  | 13.8 | %
The effective tax rate for fiscal 2021 was relatively consistent compared to the effective tax rate for fiscal 2020. The effective tax rate for fiscal 2020 was lower than the effective tax rate for fiscal 2019 primarily due to the geographic distribution of worldwide earnings. During fiscal 2019, the Company reasserted that certain historical undistributed earnings of two foreign subsidiaries would be permanently reinvested, which provided a $10.5 million benefit to the effective tax rate. The impact of the changes in the Company's assertion has been included in "Withholding tax on dividends" in the effective income tax reconciliation above. During fiscal 2021, the Company recorded a $5.9 million decrease to its valuation allowance primarily due to a net decrease of the valuation allowance in the EMEA segment driven by the release of the valuation allowance against the net deferred tax assets of a foreign subsidiary. This is partially offset by continuing losses in certain jurisdictions within the AMER segment. During fiscal 2020, the Company recorded a $4.8 million increase to its valuation allowance due to continuing losses in certain jurisdictions within the AMER and EMEA segments, partially offset by an expiration of net operating losses that had a valuation allowance recorded. During fiscal 2019, the Company recorded a $1.9 million increase to its valuation allowance due to continuing losses in certain jurisdictions within the AMER and EMEA segments, partially offset by an expiration of net operating losses that had a valuation allowance recorded. The components of the net deferred income tax assets as of October 2, 2021 and October 3, 2020, were as follows (in thousands):
|  | 2021 |  | 2020
Deferred income tax assets: |  |  |  |
Loss/credit carryforwards |  | $ | 28,234 |  |  | $ | 31,854 |
Inventories |  | 15,231 |  |  | 14,450 |
Accrued employee benefits |  | 14,488 |  |  | 14,833 |
Accrued liabilities |  | 6,410 |  |  | 7,015 |
Lease obligation |  | 18,977 |  |  | 17,854 |
Other |  | 6,719 |  |  | 5,434 |
Total gross deferred income tax assets |  | 90,059 |  |  | 91,440 |
Less valuation allowances |  | (30,321) |  |  | (34,948) |
Deferred income tax assets |  | 59,738 |  |  | 56,492 |
Deferred income tax liabilities: |  |  |  |
Property, plant and equipment |  | 19,055 |  |  | 20,923 |
Right-of-use asset |  | 12,279 |  |  | 11,213 |
Tax on unremitted earnings |  | 4,654 |  |  | 5,339 |
Acceleration of revenue under Topic 606 |  | 2,042 |  |  | 4,028 |
Deferred income tax liabilities |  | 38,030 |  |  | 41,503 |
Net deferred income tax assets/(liabilities) |  | $ | 21,708 |  |  | $ | 14,989 |
During fiscal 2021, the Company’s valuation allowance decreased by $4.6 million. This decrease is the result of decreases to the valuation allowances against the net deferred tax assets in the EMEA region of $5.6 million, partially offset by increases to the valuation allowances in the AMER region of $1.0 million. As of October 2, 2021, the Company had approximately $206.1 million of pre-tax state net operating loss carryforwards that expire between fiscal 2022 and 2042. Certain state net operating losses have a full valuation allowance against them. The Company also had approximately $71.3 million of pre-tax foreign net operating loss carryforwards that expire between fiscal 2022 and 2028 or are indefinitely carried forward. Certain foreign net operating losses have a full valuation allowance against them. The Company has been granted a tax holiday for a foreign subsidiary in the APAC segment. This tax holiday will expire on December 31, 2034, and is subject to certain conditions with which the Company expects to continue to comply. During fiscal 2021, 2020 and 2019, the tax holiday resulted in tax reductions, net of the impact of the GILTI provisions of U.S. Tax Reform, of approximately $34.4 million ($1.20 per basic share, $1.18 per diluted share), $28.3 million ($0.97 per basic share, $0.95 per diluted share) and $23.9 million ($0.79 per basic share, $0.77 per diluted share), respectively. The Company does not provide for taxes that would be payable if certain undistributed earnings of foreign subsidiaries were remitted because the Company considers these earnings to be permanently reinvested. The deferred tax liability that has not been recorded for these earnings was approximately $10.3 million as of October 2, 2021. The Company has approximately $4.6 million of uncertain tax benefits as of October 2, 2021. The Company has classified these amounts in the Consolidated Balance Sheets as "Other liabilities" (non-current) in the amount of $3.9 million and an offset to "Deferred income taxes" (non-current asset) in the amount of $0.7 million as the payment is not anticipated within one year. The following is a reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the indicated fiscal years (in thousands):
|  | 2021 |  | 2020 |  | 2019
Balance at beginning of fiscal year |  | $ | 2,096 |  |  | $ | 2,270 |  |  | $ | 5,841 |
Gross increases for tax positions of prior years |  | 623 |  |  | 509 |  |  | 62 |
Gross increases for tax positions of the current year |  | 2,161 |  |  | 465 |  |  | 39 |
Gross decreases for tax positions of prior years |  | (245) |  |  | (1,148) |  |  | (3,672) |
Balance at end of fiscal year |  | $ | 4,635 |  |  | $ | 2,096 |  |  | $ | 2,270 |
The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $3.9 million and $1.3 million for the fiscal years ended October 2, 2021 and October 3, 2020, respectively. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The total accrued penalties and net accrued interest with respect to income taxes was approximately $0.1 million for fiscal 2021 and 2020, and approximately $0.2 million for fiscal 2019. The Company recognized less than $0.1 million of expense for accrued penalties and net accrued interest in the Consolidated Statements of Comprehensive Income for fiscal 2021, 2020 and 2019. It is possible that a number of uncertain tax positions may be settled within the next 12 months. Settlement of these matters is not expected to have a material effect on the Company’s consolidated results of operations, financial position and cash flows. The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions. The following tax years remain subject to examination by the respective major tax jurisdictions:
Jurisdiction |  | Fiscal Years
China |  | 2016-2021
Germany |  | 2019-2021
Malaysia |  | 2017-2021
Mexico |  | 2016-2021
Romania |  | 2014-2021
United Kingdom |  | 2018-2021
United States |  |
Federal |  | 2015, 2017-2021
State |  | 2003-2006, 2009-2021

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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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