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Income Taxes | 12 Months Ended
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Mar. 30, 2019
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 allowed 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 additional information became available and further analyses were completed. The measurement period ends when a company has obtained, prepared, and analyzed the information necessary to finalize its accounting, not to 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, 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 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, increased the Company's effective tax rate by 4,520 basis points during Fiscal 2018. During the second quarter of Fiscal 2019, the Company recorded an additional measurement period adjustment as a result of the issuance of new interpretive guidance related to stock-based compensation for certain executives, whereby it recorded an income tax benefit and corresponding deferred tax asset of $4.7 million. Subsequently, during the third quarter of Fiscal 2019, the Company completed its analyses and recorded its final measurement period adjustments, whereby it recorded incremental charges of $32.3 million within its income tax provision, substantially all of which related to the mandatory transition tax. These measurement period adjustments increased the Company's effective tax rate by 470 basis points during Fiscal 2019. Approximately $241 million of the cumulative TCJA enactment-related charges recorded related to the mandatory transition tax (see Note 14). Additionally, during the fourth quarter of Fiscal 2018 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 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 $875 million during 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. Additionally, the Company has decided to account for the minimum tax on global intangible low-taxed income ("GILTI") 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 2019. Taxes on Income (Loss) Domestic and foreign pretax income (loss) are as follows:
|  | Fiscal Years Ended
|  | March 30, 2019 |  | March 31, 2018 |  | April 1, 2017
|  | (millions)
Domestic |  | $ | 66.6 |  |  | $ | 16.4 |  |  | $ | (155.3 | )
Foreign |  | 515.9 |  |  | 472.8 |  |  | 50.4 |
Total income (loss) before income taxes |  | $ | 582.5 |  |  | $ | 489.2 |  |  | $ | (104.9 | )
Benefits (provisions) for current and deferred income taxes are as follows:
|  | Fiscal Years Ended
|  | March 30, 2019 |  | March 31, 2018 |  | April 1, 2017
|  | (millions)
Current: |  |  |  |  |  |
Federal(a) |  | $ | (37.3 | ) |  | $ | (154.6 | ) |  | $ | 29.1 |
State and local(a) |  | (11.9 | ) |  | (5.0 | ) |  | 2.3 |
Foreign |  | (93.9 | ) |  | (82.7 | ) |  | (64.7 | )
|  | (143.1 | ) |  | (242.3 | ) |  | (33.3 | )
Deferred: |  |  |  |  |  |
Federal |  | (5.0 | ) |  | (64.1 | ) |  | 25.1 |
State and local |  | (6.9 | ) |  | (12.6 | ) |  | 2.9 |
Foreign |  | 3.4 |  |  | (7.4 | ) |  | 10.9 |
|  | (8.5 | ) |  | (84.1 | ) |  | 38.9 |
Total income tax benefit (provision) |  | $ | (151.6 | ) |  | $ | (326.4 | ) |  | $ | 5.6 |
(a) | Excludes federal, state, and local tax provisions of $17.3 million in Fiscal 2017 resulting from stock-based compensation arrangements, which was recorded within equity. In Fiscal 2018, the Company adopted ASU No. 2016-09, "Improvements to Employee Share-Based Payment Accounting" ("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.
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 30, 2019 |  | March 31, 2018 |  | April 1, 2017
|  | (millions)
Benefit (provision) for income taxes at the U.S. federal statutory rate(a) |  | $ | (122.3 | ) |  | $ | (154.3 | ) |  | $ | 36.7 |
Change due to: |  |  |  |  |  |
State and local income taxes, net of federal benefit |  | (12.4 | ) |  | (1.6 | ) |  | 2.7 |
Foreign income taxed at different rates, net of U.S. foreign tax credits |  | 27.6 |  |  | 74.7 |  |  | (25.4 | )
Unrecognized tax benefits and settlements of tax examinations |  | (3.4 | ) |  | (14.4 | ) |  | 0.5 |
Changes in valuation allowance on deferred tax assets |  | (1.4 | ) |  | 2.5 |  |  | (7.3 | )
TCJA enactment-related charges |  | (27.6 | ) |  | (221.4 | ) |  | — |
Compensation-related adjustments |  | (11.6 | ) |  | (15.4 | ) |  | — |
Other |  | (0.5 | ) |  | 3.5 |  |  | (1.6 | )
Total income tax benefit (provision) |  | $ | (151.6 | ) |  | $ | (326.4 | ) |  | $ | 5.6 |
Effective tax rate(b) |  | 26.0 | % |  | 66.7 | % |  | 5.3 | %
(a) | The U.S. federal statutory income tax rate was 21.0% during Fiscal 2019. The previous statutory rate of 35.0%, which was in effect during the Company's Fiscal 2017, was reduced to 21.0% by the TCJA effective January 1, 2018, resulting 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 2019 effective tax rate was higher than the U.S. federal statutory income tax rate of 21% primarily due to the SAB 118 measurement period adjustments recorded, as previously discussed, state and local income taxes, and compensation-related adjustments, partially offset by the favorable impact of the proportion of earnings generated in lower taxed jurisdictions. The Company's Fiscal 2018 effective tax rate was higher than the blended statutory rate of 31.5% 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, 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 of 35% 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. Deferred Taxes Significant components of the Company's deferred tax assets and liabilities are as follows:
|  | March 30, 2019 |  | March 31, 2018
|  | (millions)
Goodwill and other intangible assets |  | $ | (149.8 | ) |  | $ | (149.2 | )
Property and equipment |  | (24.6 | ) |  | (36.2 | )
Cumulative translation adjustment and hedges |  | (7.8 | ) |  | 15.0 |
Undistributed foreign earnings |  | (4.7 | ) |  | (7.1 | )
Deferred compensation |  | 53.4 |  |  | 45.7 |
Net operating loss carryforwards |  | 48.9 |  |  | 54.8 |
Lease obligations |  | 44.6 |  |  | 49.6 |
Receivable allowances and reserves |  | 25.6 |  |  | 38.5 |
Inventory basis difference |  | 19.0 |  |  | 16.0 |
Accrued expenses |  | 11.8 |  |  | 12.1 |
Transfer pricing |  | 9.0 |  |  | 9.0 |
Unrecognized tax benefits |  | 8.1 |  |  | 10.8 |
Deferred rent |  | 7.3 |  |  | 6.9 |
Deferred income |  | 1.2 |  |  | 5.2 |
Other |  | 13.2 |  |  | 14.4 |
Valuation allowance |  | (38.4 | ) |  | (35.4 | )
Net deferred tax assets(a) |  | $ | 16.8 |  |  | $ | 50.1 |
(a) | Net deferred tax balances as of March 30, 2019 and March 31, 2018 were comprised of non-current deferred tax assets of $67.0 million and $86.6 million, respectively, recorded within deferred tax assets, and non-current deferred tax liabilities of $50.2 million and $36.5 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 $2.1 million and $10.7 million (both net of tax), respectively, for tax purposes to offset future taxable income. The net operating loss carryforwards expire beginning in Fiscal 2020. The Company also has available state and foreign net operating loss carryforwards of $7.1 million and $29.1 million (both net of tax), respectively, for which no net deferred tax asset has been recognized. A full valuation allowance has been recorded against these carryforwards since the Company does not believe that it 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 allowance relating to state net operating loss carryforwards increased by $4.7 million (net of tax) as a result of net operating losses in certain jurisdictions where the Company does not believe that it will more likely than not be able to utilize these carryforwards in the future. The valuation allowance relating to foreign net operating loss carryforwards decreased by $1.7 million as a result of net operating losses in certain jurisdictions where the Company believes that it will be more likely than not to be able to utilize these carryforwards in the future. Given recent changes to the taxation of undistributed foreign earnings in connection with the TCJA, the Company has reevaluated its permanent reinvestment assertion and determined that undistributed foreign earnings that were subject to the TCJA's one-time mandatory transition tax were no longer considered to be permanently reinvested, effective December 31, 2017. 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 $548 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 2019, Fiscal 2018, and Fiscal 2017 Activity Reconciliations of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for Fiscal 2019, Fiscal 2018, and Fiscal 2017 are presented below:
|  | Fiscal Years Ended
|  | March 30, 2019 |  | March 31, 2018 |  | April 1, 2017
|  | (millions)
Unrecognized tax benefits beginning balance |  | $ | 64.2 |  |  | $ | 49.9 |  |  | $ | 49.7 |
Additions related to current period tax positions |  | 4.9 |  |  | 6.8 |  |  | 5.3 |
Additions related to prior period tax positions |  | 11.7 |  |  | 9.5 |  |  | 15.3 |
Reductions related to prior period tax positions |  | (5.5 | ) |  | (1.3 | ) |  | (3.4 | )
Reductions related to expiration of statutes of limitations |  | (4.1 | ) |  | (3.3 | ) |  | (4.1 | )
Reductions related to settlements with taxing authorities |  | (3.1 | ) |  | (0.7 | ) |  | (12.0 | )
Additions (reductions) related to foreign currency translation |  | (2.9 | ) |  | 3.3 |  |  | (0.9 | )
Unrecognized tax benefits ending balance |  | $ | 65.2 |  |  | $ | 64.2 |  |  | $ | 49.9 |
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 2019, Fiscal 2018, and Fiscal 2017 are presented below:
|  | Fiscal Years Ended |
|  | March 30, 2019 |  | March 31, 2018 |  | April 1, 2017 |
|  | (millions) |
Accrued interest and penalties beginning balance |  | $ | 15.0 |  |  | $ | 12.8 |  |  | $ | 30.9 |  |
Net additions charged to expense |  | 3.0 |  |  | 3.8 |  |  | 2.3 |  |
Reductions related to prior period tax positions |  | (3.4 | ) |  | (1.6 | ) |  | (18.3 | ) | (a)
Reductions related to settlements with taxing authorities |  | (0.8 | ) |  | (0.3 | ) |  | (0.8 | ) |
Additions (reductions) related to foreign currency translation |  | (0.2 | ) |  | 0.3 |  |  | (1.3 | ) |
Accrued interest and penalties ending balance |  | $ | 13.6 |  |  | $ | 15.0 |  |  | $ | 12.8 |  |
(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 $78.8 million and $79.2 million as of March 30, 2019 and March 31, 2018, respectively, and was 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 $70.7 million and $68.4 million as of March 30, 2019 and March 31, 2018, 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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