Quarterly report pursuant to Section 13 or 15(d)

Note K - Income Taxes

Note K - Income Taxes
9 Months Ended
Jun. 29, 2019
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
Note K—Income Taxes
The Tax Cuts and Jobs Act of
(the “New Tax Legislation”) was enacted on
December 22, 2017,
which significantly revised the U.S. corporate income tax code by, among other things, lowering federal corporate income tax rates, implementing a modified territorial tax system and imposing a repatriation tax on deemed repatriated cumulative earnings of foreign subsidiaries. The New Tax Legislation created, among other things, a new requirement that certain income earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFCs’ U.S. shareholder. In addition, new taxes were imposed related to foreign income, including a tax on global intangible low-taxed income (“GILTI”) as well as a limitation on the deduction for business interest expense (“Section
GILTI is the excess of the shareholder’s net CFC tested income over the net deemed tangible income.  The Section
(j) limitation does
allow the amount of deductible interest to exceed the sum of the taxpayer's business interest income,
of the taxpayer’s adjusted taxable income, and the taxpayer’s floor plan financing interest expense for the year. We have included in our calculation of our effective tax rate the estimated impact of GILTI and Section
In the quarter ended
December 30, 2017,
when the New Tax Legislation was enacted, we made reasonable estimates of the effects on our existing deferred tax balances and the transition tax, recording
million of tax expense based on an estimate of our total earnings and profits (E&P) from our foreign subsidiaries which were previously deferred from U.S. taxes. During the quarter ended
September 29, 2018
, we increased the provisional amount by
million based on our E&P study resulting in
million recorded in our
fiscal year. The transition tax will be paid over
years. The transitional tax was finalized during the
quarter of fiscal year
and is
longer considered provisional.
Our effective income tax rate on operations for the
-month period ended
June 29, 2019
, was
For the
-month period ended
June 30, 2018
, our effective income tax rate, excluding the
million provision related to the New Tax Legislation, was
Our effective income tax rate on operations for the fiscal year ended
September 29, 2018
, excluding the
million provision related to the New Tax Legislation, was a benefit of
We intend to reinvest all of our unremitted earnings of our foreign subsidiaries and therefore, outside of the transition tax mentioned previously, we have provided
provision for income taxes which
result from withholding taxes and/or other outside basis differences.  We believe that the determination of such income taxes is impracticable.
We benefit from having income in foreign jurisdictions that are either exempt from income taxes or have tax rates that are lower than those in the United States. Based on our current projected pre-tax income and the anticipated amount of U.S. taxable income compared to profits in the offshore taxable and tax-free jurisdictions in which we operate, our estimated annual income tax rate for the fiscal year ending
September 28, 2019,
is currently expected to be approximately
However, changes in the mix of U.S. taxable income compared to profits in tax-free or lower-tax jurisdictions can have a significant impact on our overall effective tax rate. In addition, the final impact of the New Tax Legislation
differ from our estimates, possibly materially, due to, among other things, changes in interpretations, additional regulatory guidance that
be issued, additional information that
become available to us, and actions we
take as a result of the New Tax Legislation.
We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. Tax years
according to statute and with few exceptions, remain open to examination by various federal, state, local and foreign jurisdictions.