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INCOME TAXES | 12 Months Ended
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Sep. 28, 2013
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The following table reflects income from continuing operations by location, the provision (benefit) for income taxes and the effective tax rate for fiscal 2013, 2012, and 2011:
| Fiscal
(dollar amounts in thousands) | 2013 |  | 2012 |  | 2011
United States operations | $ | (4,340 | ) |  | $ | (6,111 | ) |  | $ | 33,531 |
Foreign operations | 71,008 |  |  | 180,362 |  |  | 128,897 |
Income from operations before tax | 66,668 |  |  | 174,251 |  |  | 162,428 |
Provision for income taxes | 7,310 |  |  | 13,671 |  |  | 34,818 |
Net income | $ | 59,358 |  |  | $ | 160,580 |  |  | $ | 127,610 |
Effective tax rate | 11.0 | % |  | 7.8 | % |  | 21.4 | %
The following table reflects the provision for income taxes from continuing operations for fiscal 2013, 2012, and 2011:
| Fiscal
(in thousands) | 2013 |  | 2012 |  | 2011
Current: |  |  |  |  |
Federal | $ | (212 | ) |  | $ | 4,103 |  |  | $ | (90 | )
State | 291 |  |  | 942 |  |  | 1,099 |
Foreign | 1,732 |  |  | 5,497 |  |  | 14,764 |
Deferred: |  |  |  |  |
Federal | 985 |  |  | 4,169 |  |  | 17,463 |
State | 5 |  |  | 48 |  |  | 8 |
Foreign | 4,509 |  |  | (1,088 | ) |  | 1,574 |
Provision for income taxes | $ | 7,310 |  |  | $ | 13,671 |  |  | $ | 34,818 |
The following table reflects the difference between the provision for income taxes and the amount computed by applying the statutory federal income tax rate for fiscal 2013, 2012, and 2011:
| Fiscal
(in thousands) | 2013 |  | 2012 |  | 2011
Computed income tax expense based on U.S. statutory rate | $ | 23,334 |  |  | $ | 60,988 |  |  | $ | 56,850 |
Effect of earnings of foreign subsidiaries subject to different tax rates | (11,193 | ) |  | (30,067 | ) |  | (17,300 | )
Benefits from foreign approved enterprise zones | (9,626 | ) |  | (22,138 | ) |  | (21,079 | )
Effect of permanent items | 664 |  |  | 152 |  |  | 669 |
Changes in valuation allowance | 1,429 |  |  | 1,261 |  |  | (962 | )
Foreign operations (withholding taxes, deferred taxes on unremitted earnings, US taxation of foreign earnings) | 1,789 |  |  | 12,604 |  |  | 6,917 |
Reserve for uncertain tax positions | 683 |  |  | (7,626 | ) |  | 7,406 |
State income tax expense | (734 | ) |  | (394 | ) |  | 1,230 |
Other, net | 964 |  |  | (1,109 | ) |  | 1,087 |
Provision for income taxes | $ | 7,310 |  |  | $ | 13,671 |  |  | $ | 34,818 |
Income tax expense for the current year includes approximately $0.3 million, $3.0 million and $4.4 million of taxes payable for deemed distributions from earnings for the years ended September 28, 2013, September 29, 2012 and October 1, 2011, respectively. Undistributed earnings of certain foreign subsidiaries for which taxes have not been provided were approximately $411.4 million as of September 28, 2013. Such undistributed earnings are considered to be indefinitely reinvested in foreign operations. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable. Undistributed earnings of approximately $85.5 million are not considered to be indefinitely reinvested in foreign operations. As of September 28, 2013, the Company has provided a deferred tax liability of approximately $17.5 million for withholding taxes associated with future repatriation of earnings for certain subsidiaries. The following table reflects the net deferred tax balance, composed of the tax effects of cumulative temporary differences for fiscal 2013 and 2012:
| Fiscal
(in thousands) | 2013 |  | 2012
Inventory reserves | $ | 1,127 |  |  | $ | 2,933 |
Other accruals and reserves | 3,349 |  |  | 3,343 |
Net operating loss carryforwards | 779 |  |  | — |
Valuation allowance | (768 | ) |  | (2,761 | )
Total short-term deferred tax asset | $ | 4,487 |  |  | $ | 3,515 |
Total short-term deferred tax liability | 221 |  |  | — |
Net short-term deferred tax asset | $ | 4,266 |  |  | $ | 3,515 |
Domestic tax credit carryforwards | $ | 1,611 |  |  | $ | 628 |
Net operating loss carryforwards | 28,138 |  |  | 29,384 |
Stock options | 1,299 |  |  | 1,322 |
Other | 926 |  |  | 769 |
| 31,974 |  |  | 32,103 |
Valuation allowance | (25,676 | ) |  | (22,254 | )
Total long-term deferred tax asset (1) | $ | 6,298 |  |  | $ | 9,849 |
Repatriation of foreign earnings, including foreign withholding taxes | $ | 41,322 |  |  | $ | 40,770 |
Depreciable assets | 1,887 |  |  | (58 | )
Prepaid expenses and other | — |  |  | — |
Total long-term deferred tax liability | $ | 43,209 |  |  | $ | 40,712 |
Net long-term deferred tax liability | $ | 36,911 |  |  | $ | 30,863 |
Total net deferred tax liability | $ | 32,645 |  |  | $ | 27,348 |
(1) | Included in other assets on the Consolidated Balance Sheets are deferred tax assets of $3.8 million and $7.0 million as of September 28, 2013 and September 29, 2012, respectively.
As of September 28, 2013, the Company has foreign net operating loss carryforwards of $80.6 million, domestic state net operating loss carryforwards of $200.2 million, and tax credit carryforwards of $1.6 million that will reduce future taxable income. These carryforwards can be utilized in the future, prior to expiration of certain carryforwards in fiscal years 2014 through 2033 with the exception of certain credits and foreign net operating losses that have no expiration date. Pennsylvania tax law limits the time during which carryforwards may be applied against future taxes and Pennsylvania tax law limits the utilization of domestic state net operating loss carryforwards to as little as $3.0 million annually, but recent tax law changes will increase this amount in future years. As of September 28, 2013 and September 29, 2012, approximately $0.8 million and $1.5 million were recorded as common stock (additional paid in capital) in shareholders' equity on the Consolidated Balance Sheets attributable to stock option exercises and restricted stock vesting. The Company continues to evaluate the realizability of all of its net deferred tax assets at each reporting date and records a benefit for deferred tax assets to the extent it has deferred tax liabilities that provide a source of income to benefit the deferred tax asset. As a result of this analysis, the Company continues to maintain a valuation allowance against a majority of its state deferred tax assets as the realization of these assets is not more likely than not given uncertainty of future earnings in these jurisdictions. The beginning and ending balances of the Company's unrecognized tax benefits are reconciled below for fiscal 2013, 2012, and 2011:
|  | Fiscal
(in thousands) |  | 2013 |  | 2012 |  | 2011
Unrecognized tax benefit, beginning of year |  | $ | 6,186 |  |  | $ | 13,702 |  |  | $ | 6,413 |
Additions for tax positions, current year |  | — |  |  | — |  |  | — |
Additions for tax positions, prior year |  | 2,485 |  |  | 110 |  |  | 7,585 |
Reductions for tax positions, prior year |  | (1,802 | ) |  | (7,626 | ) |  | (296 | )
Unrecognized tax benefit, end of year |  | $ | 6,869 |  |  | $ | 6,186 |  |  | $ | 13,702 |
If recognized, the $6.9 million of unrecognized tax benefit as of September 28, 2013 would impact the Company's effective tax rate. In fiscal 2013, the Company recognized a benefit of $1.7 million related to the reversal of a reserve for uncertain tax positions based on administrative practices in a foreign jurisdiction and an additional $0.1 million related to a position effectively settled upon audit in a different foreign jurisdiction. The Company has also taken a position on a tax return in a foreign jurisdiction that does meet the recognition and measurement criteria under ASC 740 and as a result it has provided a reserve for uncertain tax position of $2.1 million. In fiscal 2011, a tax application filed with a foreign jurisdiction was rejected by that country's tax authority and the Company filed an appeal. As a result of the rejection of the application, the Company reconsidered its position and determined the benefit taken on its previously filed tax returns no longer met the recognition standard required under ASC 740. Therefore, during fiscal 2011, the Company provided a current liability of $7.5 million related to this certain unrecognized tax position, including penalties. No interest was accrued, as it is not provided for under the tax laws of the foreign jurisdiction. During the fourth quarter of fiscal 2012, the Company reached a favorable settlement with the tax authorities of a foreign jurisdiction. As a result, the current liability of $7.5 million is no longer necessary and an income tax benefit was recorded to remove the liability in fiscal 2012. The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. There were no additional accruals of interest expense on various uncertain tax positions during fiscal 2013 for matters involving jurisdictions where interest is not assessed. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months; however, the Company does not expect the change to have a material effect on its results of operations or its financial position. The Company files U.S. federal income tax return, as well as income tax returns in various state and foreign jurisdictions. For the U.S. federal income tax returns and most state tax returns, tax years following fiscal 2001 remain subject to examination as a result of the generation of net operating loss carry-forwards. The statutes of limitations with respect to the foreign jurisdictions in which the Company files vary from jurisdiction to jurisdiction and range from 4 to 6 years. As a result of committing to certain capital investments and employment levels, income from operations in Singapore and Malaysia is subject to reduced tax rates, and in some cases income from operations in Malaysia is wholly exempt from taxes. Malaysia, is wholly tax exempt. In connection with Singapore operations, the Company has been granted a decreased effective tax rate of five percent in that jurisdiction until February 1, 2020 subject to the fulfillment of certain continuing conditions. In fiscal 2013, 2012, and 2011, the preferential rate reduced income tax expense by approximately $9.6 million or $0.13 per share, $22.1 million or $0.30 per share and $21.1 million or $0.29 per share, 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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