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INCOME TAXES | 12 Months Ended
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Oct. 03, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The following table reflects U.S and foreign income before income taxes for fiscal 2020, 2019, and 2018:
| Fiscal
(in thousands) | 2020 |  | 2019 |  | 2018
United States | $ | (14,909) |  |  | $ | (14,125) |  |  | $ | 25,211 |
Foreign | 79,243 |  |  | 48,812 |  |  | 152,338 |
Income before income taxes | $ | 64,334 |  |  | $ | 34,687 |  |  | $ | 177,549 |
The following table reflects the current and deferred components of provision for (benefit from) income taxes for fiscal 2020, 2019, and 2018:
| Fiscal
(in thousands) | 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
Federal | $ | 5,129 |  |  | $ | 6,580 |  |  | $ | 83,159 |
State | 89 |  |  | 214 |  |  | 58 |
Foreign | 6,508 |  |  | 6,384 |  |  | 16,980 |
Deferred: |  |  |  |  |
Federal | (690) |  |  | 2,959 |  |  | 23,346 |
State | — |  |  | — |  |  | (2) |
Foreign | 962 |  |  | 6,773 |  |  | (2,797) |
Provision for (benefit from) income taxes | $ | 11,998 |  |  | $ | 22,910 |  |  | $ | 120,744 |
The following table reconciles the provision for (benefit from) income taxes with the expected income tax provision computed based on the applicable U.S. federal statutory tax rate for fiscal 2020, 2019, and 2018:
| Fiscal |
(dollar amounts in thousands) | 2020 |  | 2019 |  | 2018 |
Expected income provision based on the U.S. federal statutory tax rate | $ | 13,510 |  |  | $ | 7,284 |  |  | $ | 43,568 |  |
Effect of earnings of foreign subsidiaries subject to different tax rates | (1,634) |  |  | (4,335) |  |  | (12,947) |  |
Benefit from tax incentives | (6,781) |  |  | (5,084) |  |  | (20,429) |  |
Benefit from research and development tax credits | (2,915) |  |  | (3,041) |  |  | (2,785) |  |
Benefit from foreign tax credits | (1,701) |  |  | (22,744) |  |  | (3,939) |  |
U.S. one-time transition tax | — |  |  | 9,369 |  |  | 101,854 |  |
Remeasurement of deferred taxes | (145) |  |  | 5,480 |  |  | 2,760 |  |
Valuation allowance | 1,224 |  |  | 25,289 |  |  | 7,366 |  |
Foreign operations (withholding taxes, taxes on unrepatriated foreign earnings, and deemed income) | 8,886 |  |  | 8,578 |  |  | 5,746 |  |
Unrecognized tax benefit | 285 |  |  | 156 |  |  | 530 |  |
Non-deductible items | 1,232 |  |  | 2,248 |  |  | (758) |  |
Other, net | 37 |  |  | (290) |  |  | (222) |  |
Provision for (benefit from) income taxes | $ | 11,998 |  |  | $ | 22,910 |  |  | $ | 120,744 |  |
Effective tax rate | 18.6 | % |  | 66.0 | % |  | 68.0 | % |
In fiscal 2020, the Company recorded tax expense from domestic and foreign operations, a net increase in valuation allowance, non-deductible expenses, deemed income inclusions, partially offset by tax benefits from tax incentives and net tax credits. Additionally, the fourth quarter of fiscal 2020 includes an out of period adjustment of $3.5 million to correct previously unrecorded income tax expense related to prior years jurisdictional adjustments. The Company determined that the out of period adjustment to the provision for incomes taxes and income taxes payable was not material to its current or prior period consolidated financial statements. In fiscal 2019, the Company recorded an additional tax expense of $9.4 million due to subsequently issued TCJA regulations and guidance on the computation of the U.S. one-time transition tax. The Company recognized an aggregate tax expense for fiscal 2018 and 2019 of $114.0 million, comprised primarily of $2.8 million from the re-measurement of U.S. deferred tax assets and liabilities to reflect the decrease in the U.S. federal statutory tax rate in fiscal 2018, and $111.2 million related to the U.S. one-time transition tax on deemed repatriation of previously untaxed accumulated earnings and profits of certain foreign subsidiaries, net of related foreign tax credits and unrecognized tax benefit in fiscal 2018 and 2019. The Company also recorded $5.5 million in fiscal 2019 to revalue certain foreign deferred assets and liabilities to reflect enacted foreign statutory tax rates in Singapore and the Netherlands. As of October 3, 2020, a portion of the Company’s undistributed foreign earnings are not considered to be indefinitely reinvested outside the U.S. and are expected to be available for use in the U.S. without incurring additional U.S. income tax. Further, we operate in a number of foreign jurisdictions, including Singapore, where we have a tax incentive that allows for a reduced tax rate on certain classes of income, provided the Company meets certain employment and investment conditions through the expiration date in fiscal 2025. In fiscal 2020, 2019, and 2018, the tax incentive arrangement helped to reduce the Company’s provision for income taxes by $6.8 million or $0.11 per share, $5.0 million or $0.08 per share and $20.4 million or $0.29 per share, respectively. The following table reflects deferred tax balances based on the tax effects of cumulative temporary differences for fiscal 2020 and 2019:
| Fiscal
(in thousands) | 2020 |  | 2019
Accruals and reserves | $ | 7,631 |  |  | $ | 5,514 |
Tax credit carryforwards | 24,861 |  |  | 23,448 |
Net operating loss carryforwards | 37,921 |  |  | 36,050 |
Gross deferred tax assets | $ | 70,413 |  |  | $ | 65,012 |
Valuation allowance | $ | (65,298) |  |  | $ | (58,411) |
Deferred tax assets, net of valuation allowance | $ | 5,115 |  |  | $ | 6,601 |
Taxes on undistributed foreign earnings | $ | (25,676) |  |  | $ | (24,542) |
Fixed and intangible assets | (4,297) |  |  | (7,704) |
Deferred tax liabilities | $ | (29,973) |  |  | $ | (32,246) |
Net deferred tax liabilities | $ | (24,858) |  |  | $ | (25,645) |
Reported as |  |  |
Deferred tax assets | $ | 8,147 |  |  | $ | 6,409 |
Deferred tax liabilities | (33,005) |  |  | (32,054) |
Net deferred tax liabilities | $ | (24,858) |  |  | $ | (25,645) |
As of October 3, 2020, the Company has foreign net operating loss carryforwards of $95.7 million, state net operating loss carryforwards of $144.6 million, and U.S. federal and state tax credit carryforwards of $9.1 million that can be used to offset future income tax obligations. These net operating loss and tax credit carryforwards can be utilized prior to their expiration dates in fiscal years 2021 through 2039, except for certain credits and foreign net operating losses that can be carried forward indefinitely. The Company has recorded valuation allowances against certain foreign and state net operating loss carryforwards and state tax credits which are expected to expire unutilized. The following table reconciles the beginning and ending balances of the Company's unrecognized tax benefit, excluding related accrued interest and penalties, for fiscal 2020, 2019, and 2018:
|  | Fiscal
(in thousands) |  | 2020 |  | 2019 |  | 2018
Unrecognized tax benefit, beginning of year |  | $ | 12,925 |  |  | $ | 13,038 |  |  | $ | 12,062 |
Additions for tax positions, current year |  | 537 |  |  | 410 |  |  | 1,482 |
Reductions for tax positions, prior year |  | (398) |  |  | (523) |  |  | (506) |
Unrecognized tax benefit, end of year |  | $ | 13,064 |  |  | $ | 12,925 |  |  | $ | 13,038 |
The Company recognizes interest and penalties related to potential income tax liabilities as a component of unrecognized tax benefit and in provision for income taxes. The amount of interest and penalties related to unrecognized tax benefit recorded in fiscal 2020 provision for (benefit from) income taxes is not material. As of October 3, 2020, the Company has recognized $1.6 million of accrued interest and penalties related to unrecognized tax benefit within the income tax payable for uncertain tax positions and approximately $13.2 million of unrecognized tax benefit, including related interest and penalties, that if recognized, would impact the Company's effective tax rate. 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. Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, we cannot practicably estimate the financial outcomes of these examinations. The Company files a U.S. federal income tax return, as well as income tax returns in various state and foreign jurisdictions. For U.S. federal income tax returns purposes, tax years from fiscal 2017 remain subject to examination. For most state tax returns, tax years following fiscal 2001 remain subject to examination as a result of the generation of net operating loss carryforwards. 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's foreign tax returns are currently under examination by tax authorities in multiple foreign jurisdictions. The Company believes that adequate provisions have been made for any adjustments that may result from the examination.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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