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TAXES ON EARNINGS | 9 Months Ended
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Jun. 29, 2018
Income Tax Disclosure [Abstract] |
TAXES ON EARNINGS | TAXES ON EARNINGS
| Three Months Ended |  | Nine Months Ended
| June 29, 2018 |  | June 30, 2017 |  | June 29, 2018 |  | June 30, 2017
Estimated effective tax rate | (50.0 | )% |  | 32.3 | % |  | (9.4 | )% |  | 34.6 | %
The Company recognized an income tax benefit of $1.3 million and an income tax expense of $5.1 million for the three months ended June 29, 2018 and June 30, 2017, respectively, for effective rates of (50.0)% and 32.3%, respectively. The Company recognized an income tax benefit of $(2.4) million and an income tax expense of $19.6 million for the nine months ended June 29, 2018 and June 30, 2017, respectively, for effective rates of (9.4)% and 34.6%, respectively. The Company's effective tax rate decreased primarily due to the enactment of the Tax Reform Act in the U.S. during the first quarter of 2018. The Tax Reform Act significantly revised the U.S. corporate income tax structure. Among the revisions impacting the Company’s effective tax rate are a lower U.S. corporate statutory rate going from 35% to 21% effective January 1, 2018, a repeal of the deduction for domestic production activities, and changes to the way foreign earnings are taxed. As a September fiscal year filer, the lower corporate income tax rate will be phased in resulting in a U.S. statutory federal rate of 24.5% for the fiscal year ending September 28, 2018. U.S. GAAP requires the impact of tax legislation to be recognized in the period in which the law is enacted. The lower U.S. statutory rate has been included in the estimated annual effective rate used to calculate the year-to-date income tax benefit as of the end of the quarter. The repeal of the deduction for domestic production does not apply to the Company until the fiscal year beginning September 29, 2018, and so has also been included in the calculation of the estimated annual effective rate. In the first quarter of 2018 ended December 29, 2017, which was the period in which the Tax Reform Act was enacted, the Company recorded an income tax expense of $3.4 million for the tax on the deemed repatriation of deferred foreign earnings offset by a tax benefit of $9.5 million due to the revaluation of net deferred taxes. The $3.4 million of tax on the deemed repatriation of foreign earnings was reduced by the utilization of an estimated foreign tax credit carryforward from the prior fiscal year which was previously subject to a full valuation allowance. The anticipated utilization of this deferred tax asset resulted in the release of that valuation allowance and the benefit of approximately $1.9 million was included in the income tax benefit for the quarter ended December 29, 2017. While these amounts were recorded as discrete adjustments to tax expense in a prior quarter, they are also included in the income tax benefit for the nine months ended June 29, 2018. The changes included in the Tax Reform Act are broad, complex, and subject to interpretation. In addition, the calculation of the impact of certain provisions is dependent on amounts such as current year earnings and year end balances that, while they can be reasonably estimated, will only become final at the end of future accounting periods. On December 22, 2017, the SEC issued SAB 118, allowing registrants to consider the estimated impact of the U.S. legislation as “provisional” when it does not have the information necessary to complete the accounting for the change in tax law. In accordance with SAB 118, the tax on the deemed repatriation of foreign earnings of $3.4 million and the benefit of $9.5 million for the revaluation of net deferred taxes represent the Company’s best and reasonable estimate based on interpretation of the U.S. legislation, are considered provisional, and will be finalized before December 22, 2018. These provisional estimates may be revised as adjustments to tax expense in subsequent periods as additional information is obtained and as additional guidance is issued by regulatory bodies. Certain other provisions included in the Tax Reform Act have later effective dates for fiscal year filers and may have an impact on the Company’s future effective tax rate. These include, but are not limited to, changes in the taxation of foreign earnings. The Company is in the process of analyzing the effects of these provisions including GILTI (global intangible low-taxed income), BEAT (base-erosion anti-abuse tax), FDII (foreign-derived intangible income), limitations on interest expense deductions (if certain conditions apply), and other components of the Tax Reform Act. The Company has elected to account for GILTI as a period cost if and when incurred pursuant to the exposure draft issued by the FASB in January 2018. Other future adjustments to tax expense may include the impact of actions the Company may take as a result of the Tax Reform Act. As a result of the changes to the U.S. taxation of foreign earnings included in the Tax Reform Act, the Company is re-evaluating its previous indefinite reinvestment assertion with respect to these earnings. The preliminary outcome of this evaluation results in the Company revoking its assertion for current and future earnings for all countries while maintaining the assertion that historic earnings are indefinitely reinvested outside the U.S. Due to the level of earnings available for repatriation, the treaty benefits applicable to jurisdictions in which those earnings are located, and the now favorable U.S. tax treatment of repatriated foreign earnings, the amount of deferred tax liability recorded related to the potential repatriation is approximately $0.1 million. This estimated liability is for U.S. state income taxes that may be due if the foreign earnings were actually repatriated in the form of a dividend. As a number of states are still making legislative changes in response to the Tax Reform Act, and under the guidance provided by SAB 118, this estimated amount, as well as the assertion itself, are deemed provisional and subject to change in future periods. These amounts are expected to be finalized no later than the December 22, 2018 due date. The Company’s effective tax rate for the period was also impacted by an income tax accounting method change filed during the quarter. The effect of this income tax accounting method change was the acceleration of certain deductions into the tax year ended September 29, 2017 resulting in an additional income tax benefit of approximately $2.1 million. Under ASC 740, Accounting for Income Taxes, this benefit is being recorded as a discrete adjustment in the current period.

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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