Income Taxes (Tables)

12 Months Ended

Sep. 29, 2017

Income Tax Expense (Benefit) from Continuing Operations

Income tax expense (benefit) from continuing operations for fiscal 2017, 2016 and 2015 consisted of:

In Thousands	2017			2016			2015

Current
U.S. Federal	$	5,888		$	14,959		$	11,045
State		146			(852	)		492
Foreign		39,453			30,314			24,131
		45,487			44,421			35,668

Deferred
U.S. Federal		2,555			(6,703	)		(7,686	)
State		1,160			2,060			(195	)
Foreign		(10,274	)		(17,243	)		(8,831	)
		(6,559	)		(21,886	)		(16,712	)
Income tax expense	$	38,928		$	22,535		$	18,956

U.S. and Foreign Components of Earnings from Continuing Operations Before Income Taxes

U.S. and foreign components of earnings from continuing operations before income taxes for fiscal 2017, 2016 and 2015 were:

In Thousands	2017		2016		2015

U.S.	$	47,623	$	71,319	$	43,592
Foreign		117,507		69,116		72,430
Earnings from continuing operations before income taxes	$	165,130	$	140,435	$	116,022

Components of Deferred Tax Assets and Liabilities

Primary components of the Company’s deferred tax assets and liabilities at the end of the fiscal 2017 and 2016 resulted from temporary tax differences associated with the following:

In Thousands	2017			2016

Reserves and liabilities	$	49,832		$	53,119
Loss carryforwards		53,175			51,760
Tax credit carryforwards		40,440			34,836
Employee benefits		12,720			13,853
Retirement benefits		14,907			22,703
Non-qualified stock options		10,937			13,571
Hedging activities		-			3,350
Other		3,940			1,003
Total deferred tax assets		185,951			194,195
Less valuation allowance		(45,601	)		(42,976	)
Total deferred tax assets, net of valuation allowance		140,350			151,219

Depreciation and amortization		(6,503	)		(7,456	)
Intangibles and amortization		(111,196	)		(116,620	)
Deferred costs		(5,668	)		(3,907	)
Hedging activities		(2,450	)		-
Other		(3,156	)		(1,625	)
Total deferred tax liabilities		(128,973	)		(129,608	)
Net deferred tax assets (liabilities)	$	11,377		$	21,611

Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Income Tax Rate

A reconciliation of the U.S. federal statutory income tax rate to the effective income tax rate for fiscal 2017, 2016 and 2015 was as follows:

	2017			2016			2015

U.S. statutory income tax rate		35.0	%		35.0	%		35.0	%
Foreign taxes		-1.4	%		-9.8	%		-10.7	%
Difference in foreign tax rates		-4.0	%		-4.3	%		-5.2	%
Change in foreign tax rates and laws		-2.7	%		0.0	%		0.0	%
Research & development credits		-3.2	%		-5.0	%		-5.1	%
Non-deductible under consent agreement		0.0	%		0.0	%		2.2	%
Domestic manufacturing deduction		-0.4	%		-1.1	%		-0.7	%
Net change in tax reserves		-0.3	%		-0.6	%		-0.2	%
State income taxes		1.1	%		0.2	%		0.2	%
Other, net		-0.5	%		1.6	%		0.8	%
Effective income tax rate		23.6	%		16.0	%		16.3	%

Reconciliation of Amount of Unrecognized Tax Benefits

A reconciliation of the amount of unrecognized tax benefits for fiscal 2017, 2016 and 2015 is as follows:

In Thousands	2017			2016			2015

Unrecognized tax benefits as of the beginning of year	$	6,626		$	10,583		$	11,227
Unrecognized gross benefit change:
Gross increase due to prior period adjustments		59			-			672
Gross decrease due to prior period adjustments		-			(475	)		-
Gross increase due to current period adjustments		853			1,475			743
Gross decrease due to settlements with taxing authorities		-			(2,068	)		-
Gross decrease due to a lapse of the statute of limitations		(1,490	)		(2,889	)		(2,059	)
Total change in unrecognized gross benefit		(578	)		(3,957	)		(644	)
Unrecognized tax benefits as of the end of the year	$	6,048		$	6,626		$	10,583

Unrecognized tax benefits that, if recognized, would impact the effective tax rate	$	4,888		$	6,626		$	10,583

Statement of operations:
Total amount of interest income (expense) included in income tax expense	$	33		$	(308	)	$	(37	)

Recognized in the statement of financial position:
Total amount of accrued interest included in income taxes payable	$	616		$	583		$	891

During the next 12 months it is reasonably possible that approximately $1.4 million of previously unrecognized tax benefits related to operating losses and tax credits could decrease as a result of settlement of examinations and/or the expiration of statutes of limitations. The Company recognizes interest related to unrecognized tax benefits in income tax expense.

Income Tax Examinations by Tax Authorities in its Major Tax Jurisdictions

The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:

		Years No Longer
Tax Jurisdiction		Subject to Audit

U.S. Federal		2013 and prior
Belgium		2015 and prior
Canada		2008 and prior
France		2012 and prior
United Kingdom		2014 and prior