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Income Taxes (Tables)

12 Months Ended

Oct. 01, 2016

The provision for (benefit from) income taxes on income (loss) before income taxes consists of the following (in thousands):

The components of income (loss) before income taxes consist of (in thousands):

The reconciliation of the income tax expense at the U.S. Federal statutory rate (35.0%) to actual income tax expense is as follows (in thousands):



	Fiscal
	2016			2015			2014
Federal statutory tax expense	$	43,015		$	34,849		$	27,727
Valuation allowance	1,441			635			841
Foreign taxes at rates less than U.S. rates, net	(5,642		)	(10,558		)	(6,974		)
Stock-based compensation	2,161			2,150			1,326
State income taxes, net of federal income tax benefit	(198		)	(38		)	58
Research and development credit	(4,408		)	(2,979		)	(1,797		)
Deferred compensation	(428		)	(133		)	(778		)
Release of unrecognized tax benefits	(4,961		)	(39		)	(51		)
Release of interest accrued for unrecognized tax benefits	(1,508		)	(38		)	(289		)
Reversal of Competent Authority	4,328			—			—
Other	1,594			(690		)	50
Provision for income taxes	$	35,394		$	23,159		$	20,113
Effective tax rate	28.8		%	23.3		%	25.4		%

The significant components of deferred tax assets and liabilities were (in thousands):



	Fiscal year-end
	2016			2015
Deferred tax assets:
Reserves and accruals not currently deductible	$	34,800		$	31,067
Operating loss carryforwards and tax credits	52,213			53,386
Deferred service revenue	2,186			2,144
Inventory capitalization	5,001			1,827
Stock-based compensation	6,428			6,128
Competent authority offset to transfer pricing tax reserves	1,437			4,328
Depreciation and amortization	1,043			—
Other	5,277			2,418
Total gross deferred tax assets	108,385			101,298
Valuation allowance	(17,642		)	(15,556		)
Total net deferred tax assets	90,743			85,742
Deferred tax liabilities:
Gain on issuance of stock by subsidiary	20,781			20,859
Depreciation and amortization	—			5,117
Accumulated translation adjustment	4,273			2,229
Total gross deferred tax liabilities	25,054			28,205
Net deferred tax assets	$	65,689		$	57,537

The net deferred tax asset is classified on the consolidated balance sheets as follows (in thousands):



	Fiscal year-end
	2016			2015
Non-current deferred income tax assets	$	67,157		$	60,254
Non-current deferred income tax liabilities	(1,468		)	(2,717		)
Net deferred tax assets	$	65,689		$	57,537

A reconciliation of the change in gross unrecognized tax benefits, excluding interest and penalties, is as follows (in thousands):



	Fiscal year-end
	2016			2015			2014
Balance as of the beginning of the year	$	22,538		$	21,893		$	21,378
Tax positions related to current year:
Additions	2,468			311			346
Reductions	—			—			—
Tax positions related to prior year:
Additions	424			855			235
Reductions	(3,239		)	—			—
Settlements	(1,655		)	—			—
Lapses in statutes of limitations	(94		)	(521		)	(66		)
Balance as of end of year	$	20,442		$	22,538		$	21,893

A summary of the fiscal tax years that remain subject to examination, as of October 1, 2016, for our major tax jurisdictions is:



United States—Federal	2011—forward
United States—Various States	2012—forward
Netherlands	2011—forward
Germany	2011—forward
Japan	2010—forward
United Kingdom	2015—forward