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Income Taxes | 12 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes U.S. Tax Reform On December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA"), which became effective January 1, 2018. The TCJA significantly revised U.S. tax law by, among other provisions, lowering the U.S. federal statutory income tax rate from 35% to 21%, creating a territorial tax system that includes a one-time mandatory transition tax on previously deferred foreign earnings, and eliminating or reducing certain income tax deductions. ASC Topic 740, "Income Taxes," requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted. However, due to the complexity and significance of the TCJA's provisions, the SEC staff issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22, 2017, which allows companies to record the tax effects of the TCJA on a provisional basis based on a reasonable estimate, and then, if necessary, subsequently adjust such amounts during a limited measurement period as more information becomes available. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year from enactment. During the third quarter of Fiscal 2018, the Company recorded charges of $231.3 million within its income tax provision in connection with the TCJA, of which $215.5 million related to the mandatory transition tax, which it expects to pay over an eight-year period (see Note 14) and $15.8 million related to the revaluation of the Company's deferred tax assets and liabilities. Subsequently, as a result of finalizing its full Fiscal 2018 operating results, the issuance of new interpretive guidance, and other analyses performed, the Company recorded immaterial measurement period adjustments during the fourth quarter of Fiscal 2018, whereby it reversed $6.2 million of the charges related to the mandatory transition tax and $5.5 million related to the revaluation of its deferred taxes. These reversals were partially offset by an incremental charge of $1.8 million related to the expected future remittance of certain previously deferred foreign earnings. Collectively, these net charges of $221.4 million, which were recorded on a provisional basis, negatively impacted the Company's effective tax rate by 4,520 basis points and lowered its diluted earnings per share by $2.68 during Fiscal 2018. The provisional amounts were based on the Company's present interpretations of the TCJA, current available information, and assumptions about future events, and are subject to further refinement as additional information becomes available, including potential new or interpretative guidance issued by the FASB or the Internal Revenue Service and other tax agencies, and as further analyses are completed. Additionally, the Company reevaluated its permanent reinvestment assertion and determined that undistributed foreign earnings that were subject to the one-time mandatory transition tax were no longer considered to be permanently reinvested, effective December 31, 2017. In connection with this decision, the Company repatriated $252.0 million of cash to the U.S. from certain of its foreign subsidiaries during the fourth quarter of Fiscal 2018, and it repatriated an additional $400.0 million during the first quarter of Fiscal 2019. The mandatory transition tax does not apply to undistributed foreign earnings generated after December 31, 2017, and therefore the Company intends to permanently reinvest such earnings. See "Deferred Taxes" for additional discussion. The Company is also in the process of assessing various international taxation provisions of the TCJA that are effective for the Company beginning in the first quarter of Fiscal 2019, including a minimum tax on global intangible low-taxed income ("GILTI"). The Company has tentatively decided to account for GILTI tax in the period in which it is incurred and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for Fiscal 2018. The Company will continue to evaluate this policy election during Fiscal 2019. Taxes on Income (Loss) Domestic and foreign pretax income (loss) are as follows:
|  | Fiscal Years Ended
|  | March 31, 2018 |  | April 1, 2017 |  | April 2, 2016
|  | (millions)
Domestic |  | $ | 16.4 |  |  | $ | (155.3 | ) |  | $ | 274.8 |
Foreign |  | 472.8 |  |  | 50.4 |  |  | 277.0 |
Total income (loss) before income taxes |  | $ | 489.2 |  |  | $ | (104.9 | ) |  | $ | 551.8 |
Benefits (provisions) for current and deferred income taxes are as follows:
|  | Fiscal Years Ended
|  | March 31, 2018 |  | April 1, 2017 |  | April 2, 2016
|  | (millions)
Current: |  |  |  |  |  |
Federal(a) |  | $ | (154.6 | ) |  | $ | 29.1 |  |  | $ | (87.9 | )
State and local(a) |  | (5.0 | ) |  | 2.3 |  |  | 3.2 |
Foreign |  | (82.7 | ) |  | (64.7 | ) |  | (78.6 | )
|  | (242.3 | ) |  | (33.3 | ) |  | (163.3 | )
Deferred: |  |  |  |  |  |
Federal |  | (64.1 | ) |  | 25.1 |  |  | 4.6 |
State and local |  | (12.6 | ) |  | 2.9 |  |  | 1.4 |
Foreign |  | (7.4 | ) |  | 10.9 |  |  | 1.9 |
|  | (84.1 | ) |  | 38.9 |  |  | 7.9 |
Total income tax benefit (provision) |  | $ | (326.4 | ) |  | $ | 5.6 |  |  | $ | (155.4 | )
(a) | Excludes federal, state, and local tax provisions of $17.3 million in Fiscal 2017 and federal, state, and local tax benefits of $10.2 million in Fiscal 2016 resulting from stock-based compensation arrangements. Such amounts were recorded within equity. In Fiscal 2018, the Company adopted ASU 2016-09, which requires such excess tax benefits and shortfalls be reflected prospectively in the income tax benefit (provision) in the statement of operations. See Note 4 for further discussion of the Company's adoption of ASU 2016-09.
Tax Rate Reconciliation The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes provided are as set forth below:
|  | Fiscal Years Ended
|  | March 31, 2018 |  | April 1, 2017 |  | April 2, 2016
|  | (millions)
Benefit (provision) for income taxes at the U.S. federal statutory rate(a) |  | $ | (154.3 | ) |  | $ | 36.7 |  |  | $ | (193.2 | )
Change due to: |  |  |  |  |  |
State and local income taxes, net of federal benefit |  | (1.6 | ) |  | 2.7 |  |  | (10.9 | )
Foreign income taxed at different rates, net of U.S. foreign tax credits |  | 74.7 |  |  | (25.4 | ) |  | 33.6 |
Unrecognized tax benefits and settlements of tax examinations |  | (14.4 | ) |  | 0.5 |  |  | 12.7 |
Changes in valuation allowance on deferred tax assets |  | 2.5 |  |  | (7.3 | ) |  | — |
TCJA enactment-related charges |  | (221.4 | ) |  | — |  |  | — |
Stock-based compensation |  | (15.4 | ) |  | — |  |  | — |
Other |  | 3.5 |  |  | (1.6 | ) |  | 2.4 |
Total income tax benefit (provision) |  | $ | (326.4 | ) |  | $ | 5.6 |  |  | $ | (155.4 | )
Effective tax rate(b) |  | 66.7 | % |  | 5.3 | % |  | 28.2 | %
(a) | The U.S. federal statutory income tax rate for the Company's Fiscal 2017 and Fiscal 2016 was 35.0%. The TCJA reduced the statutory tax rate from 35.0% to 21.0%, effective January 1, 2018, and resulted in a blended statutory rate of 31.5% for the Company's Fiscal 2018.
(b) | Effective tax rate is calculated by dividing the income tax benefit (provision) by income (loss) before income taxes.
The Company's Fiscal 2018 effective tax rate was higher than the blended statutory rate primarily due to the enactment-related charges recorded in connection with the TCJA, as previously discussed, the negative impact of the adoption of ASU 2016-09 (see Note 4), and the unfavorable impact of additional income tax reserves associated with certain income tax audits, partially offset by the favorable impact of the proportion of earnings generated in lower taxed foreign jurisdictions versus the U.S. and tax benefits associated with adjustments recorded on deferred tax assets and provision to tax return adjustments. The Company's Fiscal 2017 effective tax rate was lower than the statutory rate primarily due to the tax impact of earnings in foreign jurisdictions, valuation allowances and adjustments recorded on deferred tax assets, and income tax reserves largely associated with an income tax settlement and certain income tax audits, partially offset by the reversal of an income tax reserve resulting from a change in tax law that impacted an interest assessment on a prior year withholding tax. The Company's Fiscal 2016 effective tax rate was lower than the statutory tax rate primarily due to the tax impact of earnings in foreign jurisdictions and the favorable impact of a change to the assessment period associated with certain tax liabilities, partially offset by the reversal of certain deferred tax assets that were determined to not be realizable. During the second quarter of Fiscal 2016, the Company concluded, with the assistance of a third-party consultant, that based on recent audit settlements and taxpayer audit trends, the assessment period associated with certain tax liabilities established under ASC Topic 740, "Income Taxes," should be reduced. This change is considered a change in estimate for accounting purposes and the related impact was recorded during the second quarter of Fiscal 2016. This change lowered the Company's provision for income taxes by $7.7 million, including interest and penalties, and net of deferred tax asset reversals, and increased basic and diluted earnings per share by $0.09 for Fiscal 2016. Deferred Taxes Significant components of the Company's deferred tax assets and liabilities are as follows:
|  | March 31, 2018 |  | April 1, 2017
|  | (millions)
Goodwill and other intangible assets |  | $ | (149.2 | ) |  | $ | (217.1 | )
Property and equipment |  | (36.2 | ) |  | (61.6 | )
Undistributed foreign earnings |  | (7.1 | ) |  | — |
Net operating loss carryforwards |  | 54.8 |  |  | 64.1 |
Lease obligations |  | 49.6 |  |  | 80.7 |
Deferred compensation |  | 45.7 |  |  | 141.6 |
Receivable allowances and reserves |  | 38.5 |  |  | 65.8 |
Inventory basis difference |  | 16.0 |  |  | 21.8 |
Cumulative translation adjustment and hedges |  | 15.0 |  |  | (10.8 | )
Accrued expenses |  | 12.1 |  |  | 9.8 |
Unrecognized tax benefits |  | 10.8 |  |  | 16.0 |
Transfer pricing |  | 9.0 |  |  | 5.6 |
Deferred rent |  | 6.9 |  |  | 14.3 |
Deferred income |  | 5.2 |  |  | 9.0 |
Excess foreign tax credits |  | — |  |  | 7.9 |
Other |  | 14.4 |  |  | 5.1 |
Valuation allowance |  | (35.4 | ) |  | (38.1 | )
Net deferred tax assets(a) |  | $ | 50.1 |  |  | $ | 114.1 |
(a) | The net deferred tax balances as of March 31, 2018 and April 1, 2017 were comprised of non-current deferred tax assets of $86.6 million and $125.9 million, respectively, recorded within deferred tax assets, and non-current deferred tax liabilities of $36.5 million and $11.8 million, respectively, recorded within other non-current liabilities in the consolidated balance sheets.
The Company has available state and foreign net operating loss carryforwards of $237.4 million and $71.5 million, respectively, for tax purposes to offset future taxable income. The net operating loss carryforwards expire beginning in Fiscal 2019. The Company also has available state and foreign net operating loss carryforwards of $44.2 million and $204.6 million, respectively, for which no net deferred tax asset has been recognized. A full valuation allowance has been recorded against these carryforwards since management does not believe that the Company will more likely than not be able to utilize these carryforwards to offset future taxable income. Subsequent recognition of these deferred tax assets would result in an income tax benefit in the year of such recognition. The valuation allowances relating to state and foreign net operating loss carryforwards increased by $5.3 million and $2.3 million, respectively, largely as a result of additional net operating losses in certain jurisdictions where management does not believe that the Company will more likely than not be able to utilize these carryforwards in the future. In connection with the Company's decision to no longer permanently reinvest undistributed foreign earnings that were subject to the TCJA's one-time mandatory transition tax, the Company recorded a deferred tax liability of $7.1 million on a provisional basis for the expected future remittance of previously taxed foreign earnings. The mandatory transition tax does not apply to undistributed foreign earnings generated after December 31, 2017. Accordingly, provision has not been made for U.S. or additional foreign taxes on approximately $98 million of undistributed earnings of foreign subsidiaries generated after December 31, 2017, as such earnings are expected to be permanently reinvested. These earnings could become subject to tax if they were remitted as dividends, if foreign earnings were lent to RLC, a subsidiary or a U.S. affiliate of RLC, or if the stock of the subsidiaries were sold. Determination of the amount of unrecognized deferred tax liability with respect to such earnings is not practicable. Uncertain Income Tax Benefits Fiscal 2018, Fiscal 2017, and Fiscal 2016 Activity Reconciliations of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for Fiscal 2018, Fiscal 2017, and Fiscal 2016 are presented below:
|  | Fiscal Years Ended
|  | March 31, 2018 |  | April 1, 2017 |  | April 2, 2016
|  | (millions)
Unrecognized tax benefits beginning balance |  | $ | 49.9 |  |  | $ | 49.7 |  |  | $ | 68.0 |
Additions related to current period tax positions |  | 6.8 |  |  | 5.3 |  |  | 5.0 |
Additions related to prior period tax positions |  | 9.5 |  |  | 15.3 |  |  | 6.9 |
Reductions related to prior period tax positions |  | (1.3 | ) |  | (3.4 | ) |  | (11.3 | )
Reductions related to expiration of statutes of limitations |  | (3.3 | ) |  | (4.1 | ) |  | (7.2 | )
Reductions related to settlements with taxing authorities |  | (0.7 | ) |  | (12.0 | ) |  | (12.0 | )
Additions (reductions) related to foreign currency translation |  | 3.3 |  |  | (0.9 | ) |  | 0.3 |
Unrecognized tax benefits ending balance |  | $ | 64.2 |  |  | $ | 49.9 |  |  | $ | 49.7 |
The Company classifies interest and penalties related to unrecognized tax benefits as part of its provision for income taxes. Reconciliations of the beginning and ending amounts of accrued interest and penalties related to unrecognized tax benefits for Fiscal 2018, Fiscal 2017, and Fiscal 2016 are presented below:
|  | Fiscal Years Ended
|  | March 31, 2018 |  | April 1, 2017 |  | April 2, 2016
|  | (millions)
Accrued interest and penalties beginning balance |  | $ | 12.8 |  |  | $ | 30.9 |  |  | $ | 47.6 |
Net additions charged to expense |  | 3.8 |  |  | 2.3 |  |  | 4.0 |
Reductions related to prior period tax positions |  | (1.6 | ) |  | (18.3 | ) | (a) | (15.4 | )
Reductions related to settlements with taxing authorities |  | (0.3 | ) |  | (0.8 | ) |  | (5.3 | )
Additions (reductions) related to foreign currency translation |  | 0.3 |  |  | (1.3 | ) |  | — |
Accrued interest and penalties ending balance |  | $ | 15.0 |  |  | $ | 12.8 |  |  | $ | 30.9 |
(a) | Includes a $15.9 million reversal of an income tax reserve resulting from a change in tax law that impacted an interest assessment on a prior year withholding tax.
The total amount of unrecognized tax benefits, including interest and penalties, was $79.2 million and $62.7 million as of March 31, 2018 and April 1, 2017, respectively, and is included within the non-current liability for unrecognized tax benefits in the consolidated balance sheets. The total amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate was $68.4 million and $46.7 million as of March 31, 2018 and April 1, 2017, respectively. Future Changes in Unrecognized Tax Benefits The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, settlements of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest and penalties, will change significantly during the next twelve months. However, changes in the occurrence, expected outcomes, and timing of such events could cause the Company's current estimate to change materially in the future. The Company files a consolidated U.S. federal income tax return, as well as tax returns in various state, local, and foreign jurisdictions. The Company is generally no longer subject to examinations by the relevant tax authorities for years prior to its fiscal year ended April 3, 2010.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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