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Income Taxes | 12 Months Ended
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Apr. 01, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Inflation Reduction Act of 2022 On August 16, 2022, President Biden signed the Inflation Reduction Act ("IRA") into law. The IRA enacted a 15% corporate minimum tax rate (subject to certain thresholds being met) that will be applicable to the Company beginning in its Fiscal 2024, a 1% excise tax on share repurchases made after December 31, 2022, and created and extended certain tax-related energy incentives. The Company does not currently expect that the tax-related provisions of the IRA will have a material impact on its consolidated financial statements. See Note 16 for additional information relating to the Company's stock repurchase program. Swiss Tax Reform In May 2019, a public referendum was held in Switzerland that approved the Federal Act on Tax Reform and AHV Financing (the "Swiss Tax Act"), which became effective January 1, 2020. The Swiss Tax Act eliminated certain preferential tax items at both the federal and cantonal levels for multinational companies, and provided the cantons with parameters for establishing local tax rates and regulations. The Swiss Tax Act also provided transitional provisions, one of which allowed eligible companies to increase the tax basis of certain assets based on the value generated by their business in previous years, and to amortize such adjustment as a tax deduction over a transitional period. The Swiss Tax Act was enacted into law during Fiscal 2020, resulting in a one-time income tax benefit and corresponding deferred tax asset of $122.9 million. During Fiscal 2021, the Company reduced its one-time tax benefit by $13.8 million due to new legislation enacted in connection with the European Union's anti-tax avoidance directive, which increased the Company's effective tax rate by 1,840 basis points. Additionally, during Fiscal 2022, the Company recorded a charge of $6.4 million within restructuring and other charges, net in the consolidated statements of operations in connection with non-income-related capital taxes resulting from Swiss tax reform. Taxes on Income Domestic and foreign pretax income (loss) are as follows:
|  | Fiscal Years Ended
|  | April 1, 2023 |  | April 2, 2022 |  | March 27, 2021
|  | (millions)
Domestic |  | $ | 74.3 |  |  | $ | 180.7 |  |  | $ | (285.0) |
Foreign |  | 617.6 |  |  | 573.9 |  |  | 210.2 |
Total income (loss) before income taxes |  | $ | 691.9 |  |  | $ | 754.6 |  |  | $ | (74.8) |
Provisions for current and deferred income taxes are as follows:
|  | Fiscal Years Ended
|  | April 1, 2023 |  | April 2, 2022 |  | March 27, 2021
|  | (millions)
Current: |  |  |  |  |  |
Federal |  | $ | (35.7) |  |  | $ | (24.2) |  |  | $ | 38.5 |
State and local |  | 1.4 |  |  | (21.6) |  |  | 1.5 |
Foreign |  | (131.0) |  |  | (154.8) |  |  | (50.7) |
|  | (165.3) |  |  | (200.6) |  |  | (10.7) |
Deferred: |  |  |  |  |  |
Federal |  | 14.3 |  |  | 53.8 |  |  | (19.2) |
State and local |  | (8.0) |  |  | 8.2 |  |  | 3.5 |
Foreign |  | (10.2) |  |  | (15.9) |  |  | (19.9) |
|  | (3.9) |  |  | 46.1 |  |  | (35.6) |
Total income tax provision |  | $ | (169.2) |  |  | $ | (154.5) |  |  | $ | (46.3) |
Tax Rate Reconciliation The differences between income taxes expected at the U.S. federal statutory income tax rate and income taxes provided are as follows:
|  | Fiscal Years Ended
|  | April 1, 2023 |  | April 2, 2022 |  | March 27, 2021
|  | (millions)
Benefit (provision) for income taxes at the U.S. federal statutory rate |  | $ | (145.3) |  |  | $ | (158.5) |  |  | $ | 15.7 |
Change due to: |  |  |  |  |  |
State and local income taxes, net of federal benefit |  | (6.3) |  |  | (14.5) |  |  | 6.1 |
Foreign income taxed at different rates, net of U.S. foreign tax credits |  | (2.7) |  |  | (2.6) |  |  | (4.8) |
Deferred tax adjustments |  | — |  |  | 8.0 |  |  | — |
Non-creditable foreign taxes |  | (8.8) |  |  | — |  |  | — |
Foreign-derived intangible income benefit |  | — |  |  | 20.3 |  |  | — |
Changes in valuation allowance on deferred tax assets |  | (0.2) |  |  | 3.6 |  |  | (34.9) |
Unrecognized tax benefits and settlements of tax examinations |  | (1.2) |  |  | (11.5) |  |  | (4.6) |
Swiss Tax Act expense |  | — |  |  | — |  |  | (13.8) |
Compensation-related adjustments |  | (7.7) |  |  | (9.4) |  |  | (12.9) |
Charitable contributions |  | 2.8 |  |  | 3.7 |  |  | 7.4 |
Transfer pricing adjustments |  | — |  |  | — |  |  | (4.1) |
Other |  | 0.2 |  |  | 6.4 |  |  | (0.4) |
Total income tax provision |  | $ | (169.2) |  |  | $ | (154.5) |  |  | $ | (46.3) |
Effective tax rate(a) |  | 24.5 | % |  | 20.5 | % |  | (61.9 | %)
(a)Effective tax rate is calculated by dividing the income tax provision by income (loss) before income taxes. The Company's Fiscal 2023 effective tax rate was higher than the U.S. federal statutory income tax rate of 21% primarily due to the unfavorable impact of certain foreign deferred adjustments, compensation-related adjustments, and state taxes. The Company's Fiscal 2022 effective tax rate was slightly lower than the U.S. federal statutory income tax rate of 21% primarily due to favorable tax impacts of the foreign-derived intangible income deduction and deferred tax adjustments, partially offset by the unfavorable impacts of additional income tax reserves associated with certain income tax audits and tax impacts of compensation related adjustments. The Company's Fiscal 2021 effective tax rate was unfavorable to the U.S. federal statutory income tax rate of 21% primarily due to incremental tax expense resulting from new legislation enacted in connection with the European Union's anti-tax avoidance directive, as previously discussed, valuation allowances recorded against certain deferred tax assets as a result of significant business disruptions attributable to COVID-19, and tax impacts on stock-based compensation and other permanent adjustments, partially offset by an income tax benefit related to charitable contributions. Deferred Taxes Significant components of the Company's deferred tax assets and liabilities are as follows:
|  | April 1, 2023 |  | April 2, 2022
|  | (millions)
Lease liabilities |  | $ | 334.9 |  |  | $ | 349.5 |
Deferred income |  | 69.8 |  |  | 96.0 |
Deferred compensation |  | 47.4 |  |  | 34.5 |
Property and equipment |  | 39.2 |  |  | 15.7 |
Unrecognized tax benefits |  | 34.2 |  |  | 31.7 |
Receivable allowances and reserves |  | 31.4 |  |  | 31.2 |
Inventory basis difference |  | 30.4 |  |  | 27.5 |
Capitalized software |  | 14.5 |  |  | — |
Net operating loss carryforwards |  | 11.7 |  |  | 58.9 |
GILTI-related carryforwards |  | 5.8 |  |  | 10.6 |
Accrued expenses |  | 5.5 |  |  | 7.3 |
Transfer pricing |  | — |  |  | 4.1 |
Lease ROU assets |  | (259.3) |  |  | (273.1) |
Goodwill and other intangible assets |  | (60.2) |  |  | (53.9) |
Cumulative translation adjustment and hedges |  | (23.1) |  |  | (11.3) |
Undistributed foreign income |  | (19.5) |  |  | (4.0) |
Other |  | (3.2) |  |  | 11.7 |
Valuation allowance |  | (11.6) |  |  | (45.1) |
Net deferred tax assets(a) |  | $ | 247.9 |  |  | $ | 291.3 |
(a)Net deferred tax balances as of April 1, 2023 and April 2, 2022 were comprised of non-current deferred tax assets of $255.1 million and $303.8 million, respectively, recorded within deferred tax assets, and non-current deferred tax liabilities of $7.2 million and $12.5 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 $1.4 million and $2.5 million (all net of tax), respectively, for tax purposes to offset future taxable income. There are no federal net operating loss carryforwards available to the Company. The net operating loss carryforwards expire beginning in Fiscal 2025. The Company also has available state and foreign net operating loss carryforwards of $5.5 million and $2.3 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 $0.8 million (net of tax) as a result of changes in tax provision for 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 $25.3 million, mainly due to the write-off of related net operating losses in jurisdictions where the Company will no longer be able to utilize the carryforwards in the future. In January 2018, new U.S. tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "TCJA") became effective. The TCJA significantly revised U.S. tax law by, among other provisions, creating a territorial tax system that included a one-time mandatory transition tax on previously deferred foreign earnings. As a result of the taxation of undistributed foreign earnings in connection with the TCJA, the Company 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 $2.178 billion 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 2023, Fiscal 2022, and Fiscal 2021 Activity Reconciliations of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for Fiscal 2023, Fiscal 2022, and Fiscal 2021 are presented below:
|  | Fiscal Years Ended
|  | April 1, 2023 |  | April 2, 2022 |  | March 27, 2021
|  | (millions)
Unrecognized tax benefits beginning balance |  | $ | 75.4 |  |  | $ | 71.4 |  |  | $ | 72.7 |
Additions related to current period tax positions |  | 13.3 |  |  | 21.6 |  |  | 3.2 |
Additions related to prior period tax positions |  | 0.6 |  |  | 8.1 |  |  | 8.8 |
Reductions related to prior period tax positions |  | (4.3) |  |  | (7.6) |  |  | (4.2) |
Reductions related to expiration of statutes of limitations |  | (2.9) |  |  | (1.1) |  |  | (2.1) |
Reductions related to settlements with taxing authorities |  | (4.5) |  |  | (14.8) |  |  | (9.6) |
Additions (reductions) related to foreign currency translation |  | (0.5) |  |  | (2.2) |  |  | 2.6 |
Unrecognized tax benefits ending balance |  | $ | 77.1 |  |  | $ | 75.4 |  |  | $ | 71.4 |
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 2023, Fiscal 2022, and Fiscal 2021 are presented below:
|  | Fiscal Years Ended
|  | April 1, 2023 |  | April 2, 2022 |  | March 27, 2021
|  | (millions)
Accrued interest and penalties beginning balance |  | $ | 16.5 |  |  | $ | 20.0 |  |  | $ | 16.2 |
Net additions charged to expense |  | 2.6 |  |  | 2.6 |  |  | 5.5 |
Reductions related to prior period tax positions |  | (1.9) |  |  | (0.9) |  |  | (1.7) |
Reductions related to settlements with taxing authorities |  | (0.4) |  |  | (5.0) |  |  | (0.3) |
Additions (reductions) related to foreign currency translation |  | (0.1) |  |  | (0.2) |  |  | 0.3 |
Accrued interest and penalties ending balance |  | $ | 16.7 |  |  | $ | 16.5 |  |  | $ | 20.0 |
The total amount of unrecognized tax benefits, including interest and penalties, was $93.8 million and $91.9 million as of April 1, 2023 and April 2, 2022, 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 $59.6 million and $60.1 million as of April 1, 2023 and April 2, 2022, 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 March 30, 2013.

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