TAXES ON EARNINGS

6 Months Ended

Apr. 03, 2020

Income Tax Disclosure [Abstract]

TAXES ON EARNINGS

TAXES ON EARNINGS

        For the three months ended April 3, 2020, the Company recognized income tax expense of $0.7 million on $1.1 million of pre-tax loss primarily due to losses in certain jurisdictions for which no benefit can be recorded due to full valuation allowance positions and overall pre-tax book loss. For the three months ended March 29, 2019, the Company recognized income tax expense of $1.9 million on $7.8 million of pre-tax income. For the six months ended April 3, 2020, the Company recognized income tax expense of $0.7 million on $2.3 million of pre-tax loss before tax primarily due to losses in certain jurisdictions for which no benefit can be recorded due to full valuation allowance positions and overall pre-tax book loss. For the six months ended March 29, 2019, the Company recognized income tax expense of $3.0 million on $11.9 million of pre-tax income. 

As a result of the changes to the U.S. taxation of foreign earnings included in U.S. Tax Reform, the Company reevaluated its previous indefinite reinvestment assertion with respect to these earnings during fiscal year 2018, which resulted 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. The Company is maintaining this prior assertion for the quarter ended April 3, 2020. 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 and foreign withholding taxes that would apply if the foreign earnings were repatriated in the form of a dividend.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), signed into law on March 27, 2020, has resulted in significant changes to the U.S. federal corporate tax law. Additionally, several state and foreign jurisdictions in which we operate have enacted legislation that complies with or is incremental to the changes included in the CARES Act.