Income Taxes

12 Months Ended

Oct. 02, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The reconciliation of the provision for income taxes to the amount computed by applying the U.S. federal statutory tax rate to earnings before income taxes is as follows:

	2021			2020			2019
Earnings before income taxes:
Domestic	$	141,665		$	1,126		$	136,308
Foreign	62,109			4,291			90,644
Total	$	203,774		$	5,417		$	226,952
Federal statutory income tax rate	21.0		%	21.0		%	21.0		%
Increase (decrease) in income taxes resulting from:
Impacts of Tax Act	(1.2)		%	(96.4)		%	0.4		%
Revaluation of deferred taxes	1.6		%	(21.6)		%	(0.2)		%
Withholding taxes	0.4		%	27.5		%	1.0		%
Reversal of indefinite reinvestment assertion	0.2		%	(2.9)		%	0.6		%
R&D and foreign tax credits	(4.6)		%	(102.8)		%	(2.1)		%
Foreign tax rates	4.4		%	76.0		%	2.3		%
Equity-based compensation	(0.1)		%	(6.5)		%	(0.7)		%
Change in valuation allowance for deferred taxes	(1.6)		%	21.1		%	(0.7)		%
State taxes, net of federal benefit	2.1		%	(1.9)		%	1.4		%
Other	0.6		%	16.6		%	0.1		%
Effective income tax rate	22.8		%	(69.9)		%	23.1		%

Our accounting policy is to treat tax on the Global Intangible Low-Tax Income ("GILTI") as a current period cost included in tax expenses the year incurred. As such, we will not be measuring the impact of the GILTI in our determination of deferred taxes. In 2021, we recorded $101 of GILTI tax and received a benefit of $2,053 related to the Foreign-Derived Intangible Income deduction. In 2021, we also recorded a tax benefit for provision to return adjustments of $3,057 related to domestic research and development tax credits and the adoption of the GILTI high tax election. In addition, we recorded a current year expense of $1,446 for a total accrual of $10,043 for taxes on undistributed earnings not considered permanently reinvested.

During 2021, 2020 and 2019, we repatriated available unremitted earnings from various foreign subsidiaries that were previously taxed under the Tax Act of $41,987, $23,001, $103,227, respectively. We do not indefinitely reinvest unremitted earnings and therefore we maintain a liability related to the remaining unremitted earnings generated by the foreign subsidiaries, which primarily relates to foreign withholding taxes. We continue to be permanently invested in outside basis differences other than the unremitted earnings as we have no plans to liquidate or sell those foreign subsidiaries.

The components of income taxes are as follows:

	2021		2020		2019
Current:
Federal	$	9,907	$	14,789	$	23,302
Foreign	23,801		18,997		29,460
State	4,684		3,271		4,240
Total current	38,392		37,057		57,002
Deferred:
Federal	4,625		(35,603)		(5,666)
Foreign	2,898		(1,843)		1,413
State	639		(3,399)		(345)
Total deferred	8,162		(40,845)		(4,598)
Income taxes (benefit)	$	46,554	$	(3,788)	$	52,404

Realization of deferred tax assets is dependent, in part, upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income, tax planning strategies, carryback opportunities and reversal of existing deferred tax liabilities in making its assessment of the recoverability of deferred tax assets.

The tax effects of temporary differences that generated deferred tax assets and liabilities are as follows:

	October 2, 2021		October 3, 2020
Deferred tax assets:
Benefit accruals	$	68,657	$	78,703
Inventory reserves	31,900		31,571
Tax benefit carryforwards	15,434		14,146
Contract reserves not currently deductible	13,294		16,418
Lease liability	16,997		17,622
Other accrued expenses	10,983		12,510
Total gross deferred tax assets	157,265		170,970
Less valuation allowance	(13,896)		(14,784)
Total net deferred tax assets	$	143,369	$	156,186
Deferred tax liabilities:
Differences in bases and depreciation of property, plant and equipment	$	164,581	$	152,926
Pension	25,661		24,810
Total gross deferred tax liabilities	190,242		177,736
Net deferred tax assets (liabilities)	$	(46,873)	$	(21,550)

Deferred tax assets and liabilities are reported in separate captions on the Consolidated Balance Sheets.

At October 2, 2021 foreign tax benefit carryforwards total $27,840 with expirations ranging from 2023 to indefinite life. Domestic benefit carryforwards include capital loss of $5,000 expiring in 2024 and state tax losses of $579 expiring in 2022. We also have $1,391 and $6,673 of federal and state tax credit carryforward with expirations from 2030 to 2031 and 2027 to indefinite life, respectively. The change in the valuation allowance relates to tax benefit carryforwards that were utilized during 2021.

We have no material unrecognized tax benefits which, if ultimately recognized, will reduce our annual effective tax rate.

We are subject to income taxes in the U.S. and in various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require the application of significant judgment. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities in significant jurisdictions for tax years before 2019. The statute of limitations in several jurisdictions will expire in the next twelve months and we will have no unrecognized tax benefits recognized if the statute of limitations expires without the relevant taxing authority examining the applicable returns.

During 2021, due to passage of time, we concluded that it would be appropriate to relieve the $1,131 accrual of interest and penalties related to historical unrecognized tax benefits in income tax expense.