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INCOME TAXES | 12 Months Ended
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Sep. 30, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The following table reflects income or losses from continuing operations by location, the provision for income taxes and the effective tax rate for fiscal 2017, 2016, and 2015:
| Fiscal
(dollar amounts in thousands) | 2017 As Restated |  | 2016 As Restated |  | 2015 As Restated
United States operations | $ | (4,114 | ) |  | $ | (12,600 | ) |  | $ | 4,178 |
Foreign operations | 122,629 |  |  | 68,764 |  |  | 34,867 |
Income from operations before tax | 118,515 |  |  | 56,164 |  |  | 39,045 |
Income tax (benefit) / expenses | $ | (7,394 | ) |  | $ | 7,709 |  |  | $ | (12,867 | )
Effective tax rate | (6.2 | )% |  | 13.7 | % |  | (33.0 | )%
The following table reflects the provision for income taxes from continuing operations for fiscal 2017, 2016, and 2015:
| Fiscal
(in thousands) | 2017 As Restated |  | 2016 As Restated |  | 2015 As Restated
Current: |  |  |  |  |
Federal | $ | (3,975 | ) |  | $ | 871 |  |  | $ | 1,459 |
State | 64 |  |  | 53 |  |  | 76 |
Foreign | 13,290 |  |  | 21,841 |  |  | 4,707 |
Deferred: |  |  |  |  |
Federal | (15,374 | ) |  | (13,423 | ) |  | (20,250 | )
State | 40 |  |  | 12 |  |  | (10 | )
Foreign | (1,439 | ) |  | (1,645 | ) |  | 1,151 |
Provision for income taxes | $ | (7,394 | ) |  | $ | 7,709 |  |  | $ | (12,867 | )
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 2017, 2016, and 2015:
| Fiscal
(in thousands) | 2017 As Restated |  | 2016 As Restated |  | 2015 As Restated
Computed income tax expense based on U.S. statutory rate | $ | 41,358 |  |  | $ | 19,658 |  |  | $ | 13,666 |
Effect of earnings of foreign subsidiaries subject to different tax rates | (22,832 | ) |  | (7,584 | ) |  | (6,344 | )
Benefits from foreign approved enterprise zones | (23,294 | ) |  | (8,701 | ) |  | (6,016 | )
Benefits from research and development tax credits | (1,859 | ) |  | (2,839 | ) |  | (4,090 | )
Benefits from foreign tax credits | (26,119 | ) |  | — |  |  | — |
Change in permanent reinvestment assertion | — |  |  | (9,696 | ) |  | (19,704 | )
Tax impact on restructuring | — |  |  | 4,238 |  |  | — |
Tax audit settlement | — |  |  | 4,889 |  |  | — |
Effect of permanent items | 778 |  |  | (2,274 | ) |  | 1,822 |
Non-deductible goodwill impairment | 8,805 |  |  | — |  |  | — |
Deferred taxes not benefited | 6,458 |  |  | 3,585 |  |  | 2,634 |
Foreign operations (withholding taxes, deferred taxes on unremitted earnings, US taxation of foreign earnings) | 6,039 |  |  | 4,981 |  |  | 4,904 |
Reserve for uncertain tax positions | 2,936 |  |  | 208 |  |  | 886 |
State income tax expense (net of federal benefit) | 60 |  |  | 996 |  |  | (1,543 | )
Other, net | 276 |  |  | 248 |  |  | 918 |
Provision for income taxes | $ | (7,394 | ) |  | $ | 7,709 |  |  | $ | (12,867 | )
During fiscal 2017, the Company elected to adopt the foreign tax credit for its U.S. federal tax return filings. As a result of this election, the Company has amended its U.S. tax returns from 2006 through 2015, filed its 2016 return on the same basis, and accrued the benefit for 2017. In fiscal 2015, the Company implemented a restructuring plan to streamline its international operations and functions resulting in a change in its permanent reinvestment assertion outside the United States. In fiscal 2016, the Company continued to execute on the restructuring plan and approximately $9.7 million of deferred tax liability was reversed and recorded as a tax benefit due to the change in its permanent reinvestment assertion. As part of the plan, the Company also recorded restructuring related tax expense of approximately $4.2 million for transfers and exchanges of certain foreign subsidiaries in an effort to streamline its international operations and functions. We consider the earnings of certain foreign subsidiaries to be permanently reinvested outside the United States. We have not recorded a deferred tax liability for U.S. federal income taxes of approximately $627.0 million of undistributed earnings. Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable, with the exception of certain foreign subsidiaries where we continue to retain a deferred tax liability for foreign withholding taxes of approximately $21.0 million, as those earnings may be distributed to its foreign parent company. Undistributed earnings of approximately $0.5 million are not considered to be permanently reinvested outside the United States. As of September 30, 2017, the Company has provided a deferred tax liability of approximately $0.2 million for withholding taxes associated with future repatriation of earnings for certain subsidiaries to the United States. The following table reflects the net deferred tax balance, composed of the tax effects of cumulative temporary differences for fiscal 2017 and 2016:
| Fiscal
(in thousands) | 2017 As Restated |  | 2016 As Restated
Inventory reserves | $ | 589 |  |  | $ | 546 |
Stock options | 422 |  |  | 647 |
Other accruals and reserves | 7,857 |  |  | 5,305 |
Domestic tax credit carryforwards | 17,635 |  |  | 8,011 |
Net operating loss carryforwards | 35,937 |  |  | 31,817 |
| $ | 62,440 |  |  | $ | 46,326 |
Valuation allowance | $ | (29,614 | ) |  | $ | (27,381 | )
Total long-term deferred tax asset | $ | 32,826 |  |  | $ | 18,945 |
Foreign withholding tax on undistributed earnings | $ | 20,945 |  |  | $ | 20,119 |
Fixed and intangible assets | 11,262 |  |  | 9,333 |
Total long-term deferred tax liability | $ | 32,207 |  |  | $ | 29,452 |
Total net deferred tax asset / (liability) | $ | 619 |  |  | $ | (10,507 | )
Reported as |  |  |
Deferred tax asset | $ | 27,771 |  |  | $ | 16,822 |
Deferred tax liability | 27,152 |  |  | 27,329 |
Total net deferred tax asset / (liability) | $ | 619 |  |  | $ | (10,507 | )
As of September 30, 2017, the Company has foreign net operating loss carryforwards of $95.8 million, domestic state net operating loss carryforwards of $165.8 million, federal tax credit carryforwards of $24.3 million, and state tax credit carryforwards of $4.9 million that can reduce future taxable income. These carryforwards can be utilized in the future, prior to expiration of certain carryforwards in fiscal years 2017 through 2035 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 also limits the utilization of domestic state net operating loss carryforwards to $5.0 million annually, but recent developments may change this amount in future years. The Company has recorded a valuation allowance against domestic state tax attributes and certain foreign tax attributes. 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 projected future taxable income or deferred tax liabilities that provide a source of future 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 apportioned earnings in these jurisdictions. The beginning and ending balances of the Company's unrecognized tax benefits are reconciled below for fiscal 2017, 2016, and 2015:
|  | Fiscal
(in thousands) |  | 2017 |  | 2016 |  | 2015
Unrecognized tax benefit, beginning of year |  | $ | 7,453 |  |  | $ | 7,101 |  |  | $ | 7,192 |
Additions for tax positions, current year |  | 3,657 |  |  | 519 |  |  | — |
Additions for tax positions, prior year |  | 1,834 |  |  | 827 |  |  | 5,140 |
Reductions for tax positions, prior year |  | (882 | ) |  | (994 | ) |  | (5,231 | )
Unrecognized tax benefit, end of year |  | $ | 12,062 |  |  | $ | 7,453 |  |  | $ | 7,101 |
Approximately $11.2 million of the $12.1 million of unrecognized tax benefit as of September 30, 2017, if recognized, would impact the Company's effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company's future effective tax rate would be affected if earnings were lower than anticipated in countries where it is subjected to lower statutory rates and higher than anticipated in countries where it is subjected to higher statutory rates, by changes in the valuation of its deferred tax assets and liabilities, or by changes in tax laws, regulations, accounting principles, or interpretations thereof. In addition, changes in assertion for foreign earnings permanently or non-permanently reinvested as a result of changes in facts and circumstances could significantly impact the effective tax rate. The Company regularly assesses the effects resulting from these factors to determine the adequacy of its provision for income taxes. 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 due to the expected lapse of statutes of limitation and/ or settlements of tax examinations. We cannot practicably estimate the financial outcomes of these examinations. The Company files U.S. federal income tax return, as well as income tax returns in various state and foreign jurisdictions. The U.S. Internal Revenue Service is currently examining the fiscal years 2006 and 2015, and all years prior to fiscal 2006 are closed. For 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. In the foreign jurisdictions where the Company files income tax returns, the statutes of limitations with respect to these jurisdictions vary from jurisdiction to jurisdiction and range from 4 to 6 years. The Company is currently under income tax examination by tax authorities in certain foreign jurisdictions. The Company believes that adequate provisions have been made for any adjustments that may result from tax examinations. 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. 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 2017, 2016, and 2015, the preferential rate reduced income tax expense by approximately $23.3 million or $0.32 per share, $8.7 million or $0.12 per share and $6.0 million or $0.08 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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
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