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Income Taxes | 12 Months Ended
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Mar. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes |
1 2. | Income Taxes
Pretax (loss) income for the fiscal years ended March 30, 2019, March 31, 2018, and April 1, 2017 was attributable to the following tax jurisdictions:
|  | Year Ended |  |
(Dollars in thousands) |  | March 30, 2019 |  |  | March 31, 2018 |  |  | April 1, 2017 |  |
Domestic |  | $ | (50,891 | ) |  | $ | 32,470 |  |  | $ | 19,200 |  |
Foreign |  |  | 9,588 |  |  |  | 10,646 |  |  |  | 8,806 |  |
(Loss) income before income taxes |  | $ | (41,303 | ) |  | $ | 43,116 |  |  | $ | 28,006 |  |
The income tax provision by jurisdiction for the fiscal years ended March 30, 2019, March 31, 2018, and April 1, 2017 was as follows:
|  | Year Ended |  |
(Dollars in thousands) |  | March 30, 2019 |  |  | March 31, 2018 |  |  | April 1, 2017 |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | 9,353 |  |  | $ | 10,033 |  |  | $ | — |  |
Foreign |  |  | 1,452 |  |  |  | 2,269 |  |  |  | 2,702 |  |
State |  |  | 3,053 |  |  |  | 2,100 |  |  |  | 684 |  |
Total current |  | $ | 13,858 |  |  | $ | 14,402 |  |  | $ | 3,386 |  |
Deferred |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal |  | $ | 1,854 |  |  | $ | 9,694 |  |  | $ | (24,492 | ) |
Foreign |  |  | 987 |  |  |  | 3,640 |  |  |  | 373 |  |
State |  |  | 206 |  |  |  | (420 | ) |  |  | (2,588 | ) |
Total deferred |  | $ | 3,047 |  |  | $ | 12,914 |  |  | $ | (26,707 | ) |
Total income tax expense (benefit) |  | $ | 16,905 |  |  | $ | 27,316 |  |  | $ | (23,321 | ) |
Income tax expense (benefit) differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income before income taxes as a result of the following differences:
|  | Year Ended |  |
(Dollars in thousands) |  | March 30, 2019 |  |  | March 31, 2018 |  |  | April 1, 2017 |  |
Tax (benefit) expense at U.S. federal statutory rate |  | $ | (8,674 | ) |  | $ | 13,599 |  |  | $ | 9,802 |  |
Increase (decrease) in rate resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |
Non-deductible share-based compensation |  |  | 17,545 |  |  |  | 203 |  |  |  | 213 |  |
Non-deductible compensation due to Section 162(m) |  |  | 2,760 |  |  |  | — |  |  |  | — |  |
State taxes, net of U.S. federal benefit |  |  | 2,412 |  |  |  | 1,083 |  |  |  | 445 |  |
Transaction costs related to the Exchange |  |  | 2,051 |  |  |  | — |  |  |  | — |  |
Deferred tax rate changes |  |  | 928 |  |  |  | 9,115 |  |  |  | 87 |  |
Foreign tax rate differences |  |  | 579 |  |  |  | (413 | ) |  |  | (722 | ) |
Other permanent difference |  |  | 531 |  |  |  | 617 |  |  |  | 1,023 |  |
Global intangible low-taxed income ("GILTI") |  |  | 524 |  |  |  | — |  |  |  | — |  |
Recognition of foreign investment basis difference |  |  | 247 |  |  |  | 12,199 |  |  |  | — |  |
Domestic Production Activities Deduction |  |  | — |  |  |  | (970 | ) |  |  | — |  |
Net utilization of U.S. tax credits |  |  | (445 | ) |  |  | (75 | ) |  |  | — |  |
Change in uncertain tax positions |  |  | (590 | ) |  |  | 23 |  |  |  | 679 |  |
Change in deferred tax valuation allowance |  |  | (986 | ) |  |  | (8,632 | ) |  |  | (35,470 | ) |
Other |  |  | 23 |  |  |  | 567 |  |  |  | 622 |  |
Total income tax expense (benefit) |  | $ | 16,905 |  |  | $ | 27,316 |  |  | $ | (23,321 | ) |
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made several changes to the U.S. Internal Revenue Code of 1986, with the following changes being most impactful: (1) decreased the corporate income tax rate from 35% to 21%; (2) implemented a territorial tax system; (3) eliminated the Section 199 Domestic Production Activities Deduction; (4) expanded the scope of executive compensation that is subject to Section 162(m) deduction limitations and (5) allowed for immediate expensing of certain qualified property placed in service after September 27, 2017. The Tax Act subjects a U.S. shareholder to current tax on GILTI earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. In conjunction with the signing of the Tax Act on December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued by the Securities and Exchange Commission (“SEC”) to address the application of U.S. GAAP in situations when a company does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. SAB 118 provides a measurement period, that should not extend beyond one year from the Tax Act enactment date, for companies to complete the accounting under ASC 740, Income Taxes. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it can determine a reasonable estimate, it must record a provisional estimate in the financial statements. During the fiscal year ended March 31, 2018, the Company recorded a provisional amount of U.S. federal income tax expense of $9.4 million related to the re-measurement of U.S. deferred income tax assets and liabilities at the new corporate income tax rate of 21% and $0.2 million of income tax benefit related to other effects. These amounts are included in income tax expense in the accompanying consolidated statements of operations during the fiscal year ended March 31, 2018. The Company continued its analysis of the Tax Act through the third quarter of fiscal 2019 which resulted in no material change to the provisional amounts recorded in fiscal 2018 related to the re-measurement of deferred tax assets and liabilities. As of December 29, 2018, the Company completed its analysis of the impact of the Tax Act and the amounts are no longer considered provisional. The current U.S. income tax rate for fiscal 2019 is 21%. The current U.S. income tax rate for fiscal 2018 is a blended rate of 31.5%. This rate is calculated under the guidance of Internal Revenue Service Notice 2018-38 by prorating the total annual taxable income by the amount of days in the fiscal year that the enacted 35% was applicable (April 2, 2017 to December 31, 2017) and the amount of days in the fiscal year that the enacted 21% was applicable (January 1, 2018 to March 31, 2018). The current U.S. income tax rate for fiscal 2017 is the pre-Tax Act rate of 35%. Deferred tax assets and liabilities at March 30, 2019 and March 31, 2018 consisted of the following:
(Dollars in thousands) |  | March 30, 2019 |  |  | March 31, 2018 |
ASSETS |  |  |  |  |  |  |  |
U.S. federal net operating loss carryforwards |  | $ | 14,213 |  |  | $ | — |
Intangible assets |  |  | 11,110 |  |  |  | 12,032 |
Employee compensation |  |  | 6,326 |  |  |  | 3,781 |
Warranty reserves |  |  | 5,792 |  |  |  | 3,887 |
Foreign tax basis difference in investments |  |  | 4,601 |  |  |  | 5,608 |
Self-insurance reserves |  |  | 4,491 |  |  |  | 3,223 |
State net operating loss carryforwards |  |  | 4,239 |  |  |  | 344 |
Inventory reserves and impairments |  |  | 3,793 |  |  |  | 3,549 |
U.S. tax credit carryforwards |  |  | 2,131 |  |  |  | — |
Dealer volume discounts |  |  | 1,409 |  |  |  | 1,551 |
Stock Compensation |  |  | 929 |  |  |  | — |
Capitalized transaction costs |  |  | 534 |  |  |  | 1,935 |
Foreign net operating loss carryforwards |  |  | 499 |  |  |  | 592 |
Foreign capital loss carryforwards |  |  | 186 |  |  |  | — |
Foreign currency translation adjustments |  |  | 9 |  |  |  | — |
Property, plant and equipment |  |  | — |  |  |  | 616 |
Other |  |  | 648 |  |  |  | 735 |
Gross deferred tax assets |  | $ | 60,910 |  |  | $ | 37,853 |
LIABILITIES |  |  |  |  |  |  |  |
Intangible assets |  | $ | 11,997 |  |  | $ | 237 |
Property, plant and equipment |  |  | 7,265 |  |  |  | 389 |
Foreign tax basis difference in investments |  |  | 3,422 |  |  |  | 3,294 |
Other |  |  | 297 |  |  |  | 584 |
Gross deferred tax liabilities |  | $ | 22,981 |  |  | $ | 4,504 |
Valuation allowance |  |  | (7,293 | ) |  |  | (6,353 | )
Net deferred tax assets |  | $ | 30,636 |  |  | $ | 26,996 |
Due to the ability to repatriate earnings from the foreign subsidiaries tax-free because of the Tax Act, the Company anticipates periodically repatriating the earnings of its Netherlands and Canadian subsidiaries. Prior to the enactment of the Tax Act, the Company’s policy was that all undistributed earnings of its foreign subsidiaries were permanently reinvested except for its U.K. subsidiaries. A deferred tax liability is recognized for income tax withholding which may be incurred upon the reversal of basis differences in investments in its foreign subsidiaries. The Company evaluates the realizability of its deferred tax assets annually. Concluding that a valuation allowance is not required is difficult when there is significant negative evidence, such as cumulative losses in recent years, which is objective and verifiable. When measuring cumulative losses in recent years, the Company first considers a three-year period of pretax book income. In fiscal 2017, the Company released the valuation allowance of $35.9 million that had been provided with respect to net deferred tax assets in the U.S. Due to the Exchange on June 1, 2018, the Company has U.S. federal and state net operating loss (“NOL”) carryforwards that were generated by the pre-Exchange Skyline entities. The Company determined that a valuation allowance of $1.9 million was necessary on the deferred tax asset for certain state NOL carryforwards, which was recorded through the opening balance sheet and did not impact income tax expense. At March 30, 2019, the Company reassessed the valuation allowance on the deferred tax asset for the Skyline state NOL carryforwards and continued to provide a $1.8 million valuation allowance. The $0.1 million change in valuation allowance from the opening balance sheet to fiscal year end was recognized through income tax benefit. The Company maintains a valuation allowance with respect to its deferred tax assets in the Netherlands for fiscal 2019, 2018 and 2017. The value of the deferred tax assets and related valuation allowance in the Netherlands was reduced to reflect the Netherlands statutory tax rate decrease from 25% to 20.5% in 2021. As of March 30, 2019, the Company has U.S. federal NOL carryforwards of $67.7 million, which expire in 2031 through 2035. The Company also has state NOL carryforwards in various jurisdictions which expire primarily in 2019 through 2039. As discussed in Note 3, during fiscal 2016 the Company committed to a plan to dispose of its U.K. operations. On January 20, 2017, the Company completed the sale of its operations in the U.K. through a stock sale. The Company did not recognize a tax benefit or tax expense as a result of the sale. As of March 30, 2019, the Company continued to maintain a deferred tax asset for its investment in the U.K. holding company which was subject to a full valuation allowance due to anticipated unrealizability in the U.K.’s parent company’s tax jurisdiction. Unrecognized tax benefits represent the differences between tax positions taken or expected to be taken on a tax return and the benefits recognized for financial statement purposes. The Company’s total unrecognized tax benefits were $0.6 million and $1.2 million at March 30, 2019 and March 31, 2018, respectively, which if recognized, would affect the effective rate on income from continuing operations. The Company classifies interest and penalties on income tax uncertainties as a component of income tax expense. Accrued interest and penalties as of March 30, 2019 and March 31, 2018, were not significant. The following table provides the changes in unrecognized tax benefits at March 30, 2019 and March 31, 2018:
(Dollars in thousands) |  | March 30, 2019 |  |  | March 31, 2018 |
Unrecognized tax benefits, beginning of period |  | $ | 1,246 |  |  | $ | 1,261 |
Increase related to tax positions taken during a prior period |  |  | 44 |  |  |  | 43 |
Decreases related to tax positions taken during a prior period |  |  | — |  |  |  | (58 | )
Reductions as a result of a lapse of the applicable statute of limitations |  |  | (647 | ) |  |  | — |
Unrecognized tax benefits, end of period |  | $ | 643 |  |  | $ | 1,246 |
The Company estimates no material changes to uncertain tax benefits in the next twelve months. The Company is no longer subject to foreign tax examinations by tax authorities for years prior to fiscal 2015. The Company’s U.S. subsidiaries are subject to U.S. federal and state tax examinations by tax authorities for fiscal 2016 through fiscal 2019. In October 2018, the Company received a notice of examination from the Internal Revenue Service (“IRS”) for the Company’s federal income tax return for the fiscal year ended April 1, 2017. The Company does not anticipate any audit adjustments that will result in a material change.

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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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