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INCOME TAXES | 12 Months Ended
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Oct. 02, 2020
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The U.S. and foreign income before income taxes for the respective years consisted of the following:
| 2020 |  | 2019 |  | 2018
United States | $ | 72,602 |  |  | $ | 59,261 |  |  | $ | 57,888 |
Foreign | 1,100 |  |  | 7,246 |  |  | 10,218 |
| $ | 73,702 |  |  | $ | 66,507 |  |  | $ | 68,106 |
Income tax expense for the respective years consisted of the following:
| 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
Federal | $ | 13,735 |  |  | $ | 11,074 |  |  | $ | 12,390 |
State | 3,348 |  |  | 2,752 |  |  | 4,482 |
Foreign | 1,109 |  |  | 1,422 |  |  | 1,678 |
Deferred | 277 |  |  | (154) |  |  | 8,887 |
| $ | 18,469 |  |  | $ | 15,094 |  |  | $ | 27,437 |
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:
| 2020 |  | 2019
Deferred tax assets: |  |  |
Inventories | $ | 1,346 |  |  | $ | 1,478 |
Compensation | 7,726 |  |  | 6,890 |
Tax credit carryforwards | 3,235 |  |  | 3,554 |
Net operating loss carryforwards | 4,427 |  |  | 4,073 |
Other | 7,154 |  |  | 7,103 |
Total gross deferred tax assets | 23,888 |  |  | 23,098 |
Less valuation allowance | 6,524 |  |  | 5,964 |
Deferred tax assets | 17,364 |  |  | 17,134 |
Deferred tax liabilities: |  |  |
Goodwill and other intangibles | 2,080 |  |  | 1,988 |
Depreciation and amortization | 5,735 |  |  | 5,143 |
Foreign statutory reserves | 288 |  |  | 192 |
Net deferred tax assets | $ | 9,261 |  |  | $ | 9,811 |
The net deferred tax assets recorded in the accompanying Consolidated Balance Sheets as of the years ended October 2, 2020 and September 27, 2019 were as follows:
| 2020 |  | 2019
Non-current assets | $ | 10,679 |  |  | $ | 11,449 |
Non-current liabilities | 1,418 |  |  | 1,638 |
Net deferred tax assets | $ | 9,261 |  |  | $ | 9,811 |
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:
| 2020 |  | 2019 |  | 2018 |
Statutory U.S. federal income tax rate | 21.0 | % |  | 21.0 | % |  | 24.5 | % | *
State income tax, net of federal benefit | 4.6 | % |  | 4.3 | % |  | 4.1 | % |
Uncertain tax positions, net of settlements | (0.1) | % |  | (0.5) | % |  | 2.2 | % |
Foreign-derived intangible income ("FDII") deduction | (1.1) | % |  | (0.9) | % |  | — | % |
Section 199 manufacturer's deduction | — | % |  | — | % |  | (2.2) | % |
Taxes related to foreign income, net of credits | — | % |  | 0.5 | % |  | 0.1 | % |
Compensation | 0.7 | % |  | (0.7) | % |  | 1.5 | % |
Tax rate or law change | — | % |  | (0.2) | % |  | 12.3 | % |
Other | — | % |  | (0.8) | % |  | (2.2) | % |
| 25.1 | % |  | 22.7 | % |  | 40.3 | % |
* The federal statutory rate is a blended rate which reflects 35% through December 31, 2017 and the lower rate of 21.0% beginning on January 1, 2018 due to tax reform. The Tax Act included a new provision designed to tax global intangible low taxed income (“GILTI”) starting in fiscal 2019. The Company elected to record the tax effects of the GILTI provision as a period expense in the applicable tax year. The Company’s net operating loss carryforwards and their expirations as of October 2, 2020 were as follows:
| State |  | Foreign |  | Total
Year of expiration |  |  |  |  |
2021-2025 | $ | 1,854 |  |  | $ | 4,423 |  |  | $ | 6,277 |
2026-2030 | 2,618 |  |  | 3,972 |  |  | 6,590 |
2031-2035 | 7,884 |  |  | — |  |  | 7,884 |
2036-2040 | 760 |  |  | — |  |  | 760 |
Indefinite | — |  |  | 6,136 |  |  | 6,136 |
Total | $ | 13,116 |  |  | $ | 14,531 |  |  | $ | 27,647 |
The Company has tax credit carryforwards as follows:
| State |  | Federal |  | Total
Year of expiration |  |  |  |  |
2021-2025 | $ | 1,699 |  |  | $ | — |  |  | $ | 1,699 |
2026-2030 | 1,058 |  |  | — |  |  | 1,058 |
2031-2035 | 478 |  |  | — |  |  | 478 |
Total | $ | 3,235 |  |  | $ | — |  |  | $ | 3,235 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits follows:
| 2020 |  | 2019
Beginning balance | $ | 7,931 |  |  | $ | 8,829 |
Gross increases - tax positions in prior period | 82 |  |  | 63 |
Gross increases - tax positions in current period | 909 |  |  | 855 |
Settlements | — |  |  | (463) |
Lapse of statute of limitations | (1,550) |  |  | (1,353) |
Ending balance | $ | 7,372 |  |  | $ | 7,931 |
The total accrued interest and penalties with respect to income taxes was approximately $1,947 and $1,942 for the years ended October 2, 2020 and September 27, 2019, respectively. The Company’s liability for unrecognized tax benefits as of October 2, 2020 was $7,372, and if recognized, $5,371 of such amount would have an effective tax rate impact. 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. Interest and penalties of $5, $79 and $537 were recorded as a component of income tax expense in the accompanying Consolidated Statements of Operations during fiscal years 2020, 2019 and 2018, respectively. The Company’s policy is to remit earnings from foreign subsidiaries only to the extent the remittance does not result in an incremental U.S. tax liability. The Company does not currently provide for the additional U.S. and foreign income taxes which would become payable upon remission of undistributed earnings of foreign subsidiaries. If all undistributed earnings were remitted, an additional income tax provision of approximately $1.4 million would have been necessary as of October 2, 2020. The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions. 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 that 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 following tax years remain subject to examination by the Company's respective major tax jurisdictions:
Jurisdiction | Fiscal Years
United States | 2017-2020
Canada | 2016-2020
France | 2017-2020
Germany | 2018-2020
Italy | 2018-2020
Switzerland | 2010-2020

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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