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INCOME TAXES | 9 Months Ended
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Jun. 29, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES On December 22, 2017, the U.S. enacted comprehensive tax legislation generally referred to as the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). The Tax Act included significant changes to existing tax law including a permanent reduction to the U.S. federal corporate income tax rate from 35% to 21%, a one-time repatriation tax on deferred foreign income (“Transition Tax”), deductions, credits and business-related exclusions. Shortly after the Tax Act was enacted, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which provides a one-year measurement period during which a company may complete its accounting for certain tax effects of the Tax Act impact as "provisional" when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law. Future adjustments to the provisional numbers are to be recorded as discrete adjustments to income tax expense in the period in which those adjustments become estimable and/or are finalized. Accordingly, the additional provisional income tax of $6,763 as of June 29, 2018 reflects (i) the current year impacts of the Tax Act on the Company's estimated annual effective tax rate and (ii) the following discrete items resulting directly from the enactment of the Tax Act based on the information currently available, prepared, or analyzed (including computations) in reasonable detail.
(i) | The Tax Act reduces the U.S. federal corporate tax rate from 35% to 21%. The impact from the permanent reduction to the U.S. federal corporate income tax rate from 35% to 21% is effective January 1, 2018. When a U.S. federal tax rate change occurs during a fiscal year, taxpayers are required to compute a weighted daily average rate for the fiscal year of enactment and as a result the Company calculated a U.S. federal statutory income tax rate of 24.5% for the current fiscal year end September 28, 2018.
(ii) | The tax expense impact associated with the enactment of the U.S. Tax Act resulted in additional discrete tax expense in the current period as follows:
| Nine Months Ended
(thousands) | June 29, 2018
Transition tax (provisional) | $ | 3,200 |
Net impact on U.S. deferred tax assets and liabilities (provisional) | 3,563 |
Net impacts of the enactment of the Tax Act | $ | 6,763 |
Within the calculation of the Company’s annual effective tax rate, the Company has used assumptions and estimates that may change as a result of future guidance, interpretation, and rule-making from the Internal Revenue Service, the SEC, and the FASB and/or various other taxing jurisdictions. For example, the Company anticipates that the state jurisdictions will continue to determine and announce their conformity to the Tax Act which could have an impact on the Company's annual effective tax rate. For the three and nine months ended June 29, 2018 and June 30, 2017, the Company’s earnings before income taxes, income tax expense and effective income tax rate were as follows:
| Three Months Ended | Nine Months Ended
(thousands, except tax rate data) | June 29, 2018 | June 30, 2017 | June 29, 2018 | June 30, 2017
Profit (loss) before income taxes | $ | 31,779 |  | $ | 25,560 |  | $ | 69,548 |  | $ | 47,352 |
Income tax expense | 8,009 |  | 9,007 |  | 23,923 |  | 12,784 |
Effective income tax rate | 25.2 | % | 35.2 | % | 34.4 | % | 27.0 | %
The change in the Company’s effective tax rate for the three months ended June 29, 2018 versus the prior year period was primarily due to the impact of the reduced federal statutory income tax rate on current year earnings from the enactment of the Tax Act. During the current year quarter, the Company recorded no change to tax expense related to the estimated provisional amount previously recorded. The change in the Company's effective tax rate for the nine months ended June 29, 2018 versus the prior year period was primarily due to the impact of the $6,763 provisional tax expense generated by the enactment of the Tax Act in the current year period compared to a prior year foreign tax credit net tax benefit of approximately $4,200 generated by the repatriation of approximately $22,000 from foreign jurisdictions to the U.S. Adverse changes in profitability and financial outlook in both the U.S. and/or foreign jurisdictions or changes in the Company's geographic footprint may require changes in valuation allowances in order to reduce the Company’s deferred tax assets. Such changes may drive fluctuations in the effective tax rate. The impact of the Company’s operations in jurisdictions where a valuation allowance is assessed, primarily in the foreign locations, is removed from the overall effective tax rate methodology and recorded directly based on year to date results for the year for which no tax expense or benefit can be recognized. The tax jurisdictions that have a valuation allowance for the periods ended June 29, 2018 and June 30, 2017 were:
June 29, 2018 | June 30, 2017
Australia | Australia
Austria | Austria
France | France
Indonesia | Indonesia
| Italy
| Japan
Netherlands | Netherlands
New Zealand | New Zealand
Spain | Spain
| Switzerland
The Company regularly assesses the adequacy of its provisions for income tax contingencies in accordance with the applicable authoritative guidance on accounting for income taxes. As a result, the Company may adjust the reserves for unrecognized tax benefits due to the impact of changes in its assumptions or as a result of new facts and developments, such as changes to interpretations of relevant tax law, assessments from taxing authorities, settlements with taxing authorities and lapses of statutes of limitation. The Company’s 2018 fiscal year tax expense is anticipated to include approximately $500 related to uncertain income tax positions. In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized benefits as a component of income tax expense. The Company is projecting accrued interest of $300 related to uncertain income tax positions for the fiscal year ending September 28, 2018. The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions. The Company is currently undergoing income tax examinations in Italy. As of the date of this report, the following tax years remain open to examination by the respective tax jurisdictions:
Jurisdiction | Fiscal Years
United States | 2015-2017
Canada | 2013-2017
France | 2014-2017
Germany | 2013-2017
Italy | 2012-2017
Switzerland | 2007-2017

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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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