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Income Taxes | 12 Months Ended
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Oct. 02, 2015
Income Taxes [Abstract] |
Income Taxes | 6 INCOME TAXES The U.S. and foreign income before income taxes for the respective years consisted of the following:
| 2015 | 2014 | 2013
United States | $ | 11,886 | $ | 11,592 | $ | 19,885
Foreign |  | 3,867 |  | 5,830 |  | 4,775
| $ | 15,753 | $ | 17,422 | $ | 24,660
Income tax expense for the respective years consisted of the following:
| 2015 | 2014 | 2013
Current: |  |  |  |  |  |
Federal | $ | 4,916 | $ | 3,888 | $ | 2,832
State |  | 882 |  | 403 |  | 470
Foreign |  | 1,469 |  | 1,886 |  | 1,437
Deferred |  | (2,130) |  | 2,122 |  | 594
| $ | 5,137 | $ | 8,299 | $ | 5,333
The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at the end of the respective years are presented below:
| 2015 | 2014 |
Deferred tax assets: |  |  |  |  |  |
Inventories | $ | 2,495 | $ | 1,809 |  |
Compensation |  | 12,312 |  | 10,362 |  |
Tax credit carryforwards |  | 4,888 |  | 3,462 |  |
Net operating loss carryforwards |  | 6,360 |  | 7,333 |  |
Other |  | 5,532 |  | 4,635 |  |
Total gross deferred tax assets |  | 31,587 |  | 27,601 |  |
Less valuation allowance |  | 9,786 |  | 8,734 |  |
Deferred tax assets |  | 21,801 |  | 18,867 |  |
Deferred tax liabilities: |  |  |  |  |  |
Goodwill and other intangibles |  | 1,185 |  | 989 |  |
Depreciation and amortization |  | 5,411 |  | 4,795 |  |
Foreign statutory reserves |  | 520 |  | 503 |  |
Net deferred tax assets | $ | 14,685 | $ | 12,580 |  |
The net deferred tax assets recorded in the accompanying Consolidated Balance Sheet as of the years ended October 2, 2015 and October 3, 2014 were as follows:
| 2015 | 2014 |
Current assets | $ | 10,649 | $ | 8,360 |  |
Non-current assets |  | 5,218 |  | 5,353 |  |
Non-current liabilities |  | 1,182 |  | 1,133 |  |
Net deferred tax assets | $ | 14,685 | $ | 12,580 |  |
The significant differences between the statutory federal tax rate and the effective income tax rates for the Company for the respective years shown below were as follows:
|  | 2015 | 2014 | 2013
Statutory U.S. federal income tax rate |  | 35.0 | % | 35.0 | % | 35.0 | %
Foreign rate differential |  | (2.4) |  | (0.5) |  | (4.1) |
State income tax, net of federal benefit |  | 2.4 |  | 4.4 |  | 4.5 |
Tax credit |  | (18.8) |  | (6.3) |  | (3.1) |
Deferred tax asset valuation allowance |  | 10.0 |  | (4.3) |  | (11.5) |
Unrecognized tax benefit |  | 1.7 |  | 5.4 |  | - |
Goodwill impairment |  | 0.0 |  | 10.4 |  | - |
Other |  | 4.7 |  | 3.6 |  | 0.8 |
|  | 32.6 | % | 47.7 | % | 21.6 | %
The Company’s net operating loss carryforwards and their expirations as of October 2, 2015 were as follows:
| State | Foreign | Total
Year of expiration |  |  |  |  |  |
2016-2020 | $ | 1,357 | $ | 2,263 | $ | 3,620
2021-2025 |  | 3,232 |  | 3,298 |  | 6,530
2026-2030 |  | 30,149 |  | - |  | 30,149
2031-2035 |  | 1,693 |  | - |  | 1,693
Indefinite |  | - |  | 7,150 |  | 7,150
Total | $ | 36,431 | $ | 12,711 | $ | 49,142
The Company has tax credit carryforwards comprised of state credits as shown in the table below.
| State | Federal | Total
Year of expiration |  |  |  |  |  |
2016-2020 | $ | 1,408 | $ | - | $ | 1,408
2021-2025 |  | 1,851 |  | - |  | 1,851
2026-2030 |  | 1,058 |  | - |  | 1,058
2031-2035 |  | 478 |  | - |  | 478
Indefinite |  | - |  | 93 |  | 93
Total | $ | 4,795 | $ | 93 | $ | 4,888
Under generally accepted accounting principles, the Company considers at each reporting period all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed to reduce its deferred tax asset to an amount that is more likely than not to be realized. The determination of the need for a valuation allowance for the deferred tax assets is dependent upon management’s evaluation of both positive and negative evidence. Positive evidence includes the probability of achieving forecasted future taxable income, applicable tax strategies and assessments of the current and future economic and business conditions. Negative evidence includes a jurisdiction’s cumulative losses and expiring tax carryforwards. The negative impact of the valuation allowance in 2015 was primarily the result of more likely than not realizing a significant portion of the U.S. state deferred tax assets. In the fourth quarter of 2015, the Company reached the conclusion that it was appropriate to (1) release the valuation allowance against the Italian deferred tax assets due to the sustained positive operating performance of its Italy operations and (2) setup a valuation allowance against the deferred tax assets in Australia and Switzerland due to continued negative operating performance in both of these jurisdictions. The positive impact of the valuation allowance in fiscal 2014 of a tax benefit was primarily the result of earnings in Italy, Netherlands, Spain and United Kingdom offsetting operating losses in France, Japan and New Zealand. The Company believed at that time that the negative evidence continued to outweigh the positive evidence and, as such, the valuation allowance during fiscal 2014 remained in place. For 2013, the positive impact of the valuation allowance on tax expense was primarily the result of the expected usage of foreign tax credits, offset in part by increases in foreign valuation allowances. Operating losses in France, Netherlands, New Zealand and the United Kingdom were partially offset by income in Italy, Spain and Japan. Taxes paid were $2,269, $6,581 and $2,399 for 2015, 2014 and 2013, respectively. In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. The total accrued interest and penalties with respect to income taxes was approximately $787 and $778 for the years ended October 2, 2015 and October 3, 2014, respectively. Interest and penalties of $148, $186 and ($21) were recorded as a component of income tax expense (benefit) in the accompanying Consolidated Statements of Operations during fiscal years 2015, 2014 and 2013, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the last three fiscal years was as follows:
Balance at September 28, 2012 | $ | 1,900
Settlement |  | (186)
Lapse of statute of limitations |  | (214)
Gross increases - tax positions in period |  | 655
Balance at September 27, 2013 | $ | 2,155
Settlement |  | -
Lapse of statute of limitations |  | (161)
Gross increases - tax positions in period |  | 1,097
Balance at October 3, 2014 | $ | 3,091
Settlement |  | (103)
Lapse of statute of limitations |  | (329)
Gross increases - tax positions in period |  | 698
Balance at October 2, 2015 | $ | 3,357
The Company has not provided additional U.S. income taxes on $104,481 of undistributed earnings of consolidated foreign subsidiaries included in shareholders’ equity attributable to the Company. Such earnings could become taxable upon the sale or liquidation of these foreign subsidiaries or upon dividend repatriation. The Company’s intent is for such earnings to be reinvested by the subsidiaries or to be repatriated only when it would be tax effective through the utilization of foreign tax credits. It is not practicable to estimate the amount of unrecognized withholding taxes and deferred tax liability on such earnings. As of October 2, 2015, the Company held approximately $55,492 of cash and cash equivalents in foreign jurisdictions. The Company is currently undergoing examinations in Italy and Germany. The amount of unrecognized tax benefits recognized within the next twelve months may decrease due to expiration of the statute of limitations for certain years in various jurisdictions. However, it is possible that a jurisdiction may open an audit prior to the statute expiring or one of the aforementioned audits may result in adjustments to the Company’s tax filings. At this time, an estimate of the range of the reasonably possible change cannot be made. 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
United States | 2012-2015
Canada | 2011-2015
France | 2011-2015
Germany | 2010-2015
Italy | 2010-2015
Japan | 2012-2015
Switzerland | 2005-2015

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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=6907707&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=6907707&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=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 SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 + Details
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