INCOME TAXES

6 Months Ended

Apr. 28, 2024

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE K - INCOME TAXES

The Company’s tax provision is determined using an estimated annual effective tax rate and adjusted for discrete taxable events that may occur during the quarter. The effects of tax legislation are recognized in the period in which the law is enacted. The deferred tax assets and liabilities are remeasured using enacted tax rates expected to apply to taxable income in the years the related temporary differences are anticipated to reverse.

The Company’s effective tax rate for the quarter and six months ended April 28, 2024, was 22.5% and 23.0%, respectively, compared to 22.1% and 22.4%, respectively, for the corresponding periods a year ago. The Company benefited from the impact of higher federal deductions in the prior year.

Unrecognized tax benefits, including interest and penalties, are recorded in Other Long-term Liabilities. If recognized as of April 28, 2024, these benefits would impact the Company’s effective tax rate by $16.6 million compared to $19.3 million as of April 30, 2023. The Company includes accrued interest and penalties related to uncertain tax positions in Provision for Income Taxes, with immaterial losses included during the quarter ended April 28, 2024, and April 30, 2023. The amount of accrued interest and penalties associated with unrecognized tax benefits was $2.5 million at April 28, 2024, and $3.0 million at April 30, 2023.

The Company is regularly audited by federal and state taxing authorities. The IRS concluded its examination of fiscal 2021 in the second quarter of fiscal 2023. The IRS placed the Company in the Bridge phase of the Compliance Assurance Process (CAP) for fiscal years 2020 and 2023. In this phase, the IRS will not accept any disclosures, conduct any reviews, or provide any assurances. The Company has elected to participate in CAP for fiscal years through 2025. The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time.

The Company is in various stages of audit by several state taxing authorities on a variety of fiscal years, as far back as 2015. While it is reasonably possible that one or more of these audits may be completed within the next 12 months and the related unrecognized tax benefits may change based on the status of the examinations, it is not possible to reasonably estimate the effect of any amount of such change to previously recorded uncertain tax positions.