Income Taxes

12 Months Ended

Apr. 03, 2021

11.	Income Taxes

Pretax income (loss) for the fiscal years ended April 3, 2021, March 28, 2020, and March 30, 2019 was attributable to the following tax jurisdictions:

	Year Ended
(Dollars in thousands)	April 3, 2021		March 28, 2020		March 30, 2019

Domestic	$	92,832	$	76,224	$	(50,891	)
Foreign		18,568		8,830		9,588
Income (loss) before income taxes	$	111,400	$	85,054	$	(41,303	)

The income tax provision by jurisdiction for the fiscal years ended April 3, 2021, March 28, 2020, and March 30, 2019 was as follows:

	Year Ended
(Dollars in thousands)	April 3, 2021			March 28, 2020		March 30, 2019

Current:
U.S. federal	$	13,094		$	9,360	$	9,353
Foreign		4,738			1,938		1,452
State		5,081			3,800		3,053
Total current	$	22,913		$	15,098	$	13,858
Deferred
U.S. federal	$	2,853		$	5,660	$	1,854
Foreign		851			5,214		987
State		(116	)		922		206
Total deferred	$	3,588		$	11,796	$	3,047
Total income tax expense	$	26,501		$	26,894	$	16,905

Income tax expense 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)	April 3, 2021			March 28, 2020			March 30, 2019
Tax expense (benefit) at U.S federal statutory rate	$	23,394		$	17,861		$	(8,674	)
Increase (decrease) in rate resulting from:
State taxes, net of U.S. federal benefit	$	3,969		$	4,491		$	2,412
Change in deferred tax valuation allowance		1,343			3,652			(986	)
Foreign tax rate differences		900			502			579
Recognition of foreign investment basis difference		616			25			247
Non-deductible compensation due to Section 162(m)		586			1,007			2,760
Other permanent difference		265			844			531
Non-deductible equity-based compensation		—			—			17,545
Transaction costs related to the Exchange		—			—			2,051
Uncertain tax positions		—			(643	)		(590	)
Deferred tax rate changes		(778	)		538			928
U.S. tax credits		(3,096	)		(1,005	)		(445	)
Other		(698	)		(378	)		547
Total income tax expense	$	26,501		$	26,894		$	16,905

The Tax Cuts and Jobs Act enacted in 2017 (“Tax Act”) subjects a U.S. shareholder to current tax on Global Intangible Low-Taxed Income (“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.

The U.S. income tax rate for fiscal 2021, 2020 and 2019 is 21%.

Deferred tax assets and liabilities at April 3, 2021 and March 28, 2020 consisted of the following:

(Dollars in thousands)	April 3, 2021			March 28, 2020
ASSETS
Intangible assets	$	10,665		$	9,665
Employee compensation		7,500			5,665
Warranty reserves		7,041			6,175
Foreign net operating loss carryforwards		6,250			5,400
U.S. federal net operating loss carryforwards		4,583			9,368
Self-insurance reserves		4,058			3,806
Lease assets		2,879			3,684
State net operating loss carryforwards		2,372			2,793
U.S. tax credit carryforwards		2,030			2,030
Dealer volume discounts		1,631			1,216
Inventory reserves and impairments		1,558			1,656
Equity-based compensation		1,333			1,156
Capitalized transaction costs		377			456
Foreign capital loss carryforwards		187			168
Outside basis difference in domestic partnership investment		-			2,229
Foreign currency translation adjustments		-			67
Other		1,282			1,130
Gross deferred tax assets	$	53,746		$	56,664
LIABILITIES
Intangible assets	$	9,470		$	10,711
Property, plant, and equipment		8,213			8,411
Foreign tax basis difference in investments		4,280			3,264
Lease liabilities		2,879			3,684
Other		718			837
Gross deferred tax liabilities	$	25,560		$	26,907
Valuation allowance		(12,552	)		(11,209	)
Net deferred tax assets	$	15,634		$	18,548

The Company anticipates periodically repatriating the earnings of its Netherlands and Canadian 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 periodically evaluates the realizability of its deferred tax assets based on whether it is “more likely than not” that some portion of the deferred tax assets will not be realized. Our evaluation considers available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. 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’s valuation allowance principally consists of valuation allowances for certain state NOL carryforwards, certain Canadian deferred tax assets, and the Company’s deferred tax assets in the Netherlands.

As of April 3, 2021, the Company has U.S. federal NOL carryforwards of $21.8 million, which expire in 2032 through 2035. The Company also has state NOL carryforwards in various jurisdictions which expire primarily in 2021 through 2041.

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. There were no unrecognized tax benefits at April 3, 2021 or March 28, 2020. The Company classifies interest and penalties on income tax uncertainties as a component of income tax expense. Accrued interest and penalties as of April 3, 2021 and March 28, 2020, were not significant. The following table provides the changes in unrecognized tax benefits for fiscal 2021 and 2020:

(Dollars in thousands)	April 3, 2021		March 28, 2020

Unrecognized tax benefits, beginning of period	$	—	$	643
Increase related to tax positions taken during a prior period		—		—
Reductions as a result of a lapse of the applicable statute of limitations		—		(643	)
Unrecognized tax benefits, end of period	$	—	$	—

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 2017. The Company’s U.S. subsidiaries are subject to U.S. federal tax examinations for fiscal 2018 through fiscal 2021, and U.S. state tax examinations by tax authorities for fiscal 2017 through fiscal 2021.

- 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.

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