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INCOME TAXES | 12 Months Ended
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Apr. 02, 2016
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Domestic and foreign income before provision for income tax is as follows:
(In thousands) | April 2, 2016 |  | March 28, 2015 |  | March 29, 2014
Domestic | $ | (18,526 | ) |  | $ | (17,265 | ) |  | $ | (6,859 | )
Foreign | (34,890 | ) |  | 48,430 |  |  | 43,260 |
Total | $ | (53,416 | ) |  | $ | 31,165 |  |  | $ | 36,401 |
The income tax provision from continuing operations contains the following components:
(In thousands) | April 2, 2016 |  | March 28, 2015 |  | March 29, 2014
Current |  |  |  |  |  |  |  |
Federal | $ | 12 |  |  | $ | 3,526 |  |  | $ | (4,896 | )
State | (660 | ) |  | 898 |  |  | 873 |
Foreign | 3,842 |  |  | 5,614 |  |  | 5,478 |
Total current | $ | 3,194 |  |  | $ | 10,038 |  |  | $ | 1,455 |
Deferred |  |  |  |  |  |  |  |
Federal | 3,532 |  |  | 1,227 |  |  | (1,785 | )
State | 319 |  |  | 3,215 |  |  | 207 |
Foreign | (4,882 | ) |  | (212 | ) |  | 1,376 |
Total deferred | $ | (1,031 | ) |  | $ | 4,230 |  |  | $ | (202 | )
Total | $ | 2,163 |  |  | $ | 14,268 |  |  | $ | 1,253 |
Our subsidiary in Puerto Rico has been granted a fifteen year tax grant which expires in 2027. Our qualification for the tax grant is dependent on the continuation of our manufacturing activities in Puerto Rico. We benefit from a reduced tax rate on our earnings in Puerto Rico under the tax grant. Our subsidiary in Switzerland operates as a principal company for direct federal tax purposes. Operating under this structure affords our Swiss subsidiary a reduced tax rate in Switzerland. Our Swiss subsidiary also operates under a 10 year tax holiday set to expire in 2018. In fiscal 2016, we recorded a $7.1 million benefit to income taxes relating to the impairment of goodwill and certain intangible assets. Tax affected, significant temporary differences comprising the net deferred tax liability are as follows:
(In thousands) | April 2, 2016 |  | March 28, 2015
Deferred tax assets: |  |  |
Depreciation | $ | 1,749 |  |  | $ | 609 |
Amortization of intangibles | 4,417 |  |  | 727 |
Inventory | 7,607 |  |  | 6,193 |
Hedging | 382 |  |  | 84 |
Accruals, reserves and other deferred tax assets | 12,590 |  |  | 17,526 |
Net operating loss carry-forward | 13,484 |  |  | 5,392 |
Stock based compensation | 9,622 |  |  | 10,652 |
Tax credit carry-forward, net | 16,191 |  |  | 8,678 |
Gross deferred tax assets | 66,042 |  |  | 49,861 |
Less valuation allowance | (24,297 | ) |  | (16,027 | )
Total deferred tax assets (after valuation allowance) | 41,745 |  |  | 33,834 |
Deferred tax liabilities: |  |  |
Depreciation | (28,972 | ) |  | (24,342 | )
Amortization of goodwill and intangibles | (23,626 | ) |  | (24,764 | )
Unremitted earnings | (700 | ) |  | — |
Other deferred tax liabilities | (2,769 | ) |  | (1,604 | )
Total deferred tax liabilities | (56,067 | ) |  | (50,710 | )
Net deferred tax liabilities | $ | (14,322 | ) |  | $ | (16,876 | )
The valuation allowance increased by $8.3 million during 2016, primarily as the result of current year net operating losses and tax credits generated in domestic and foreign jurisdictions in which we have concluded that our deferred tax assets are not more-likely-than-not realizable. In determining the need for a valuation allowance, we have assessed the available means of recovering deferred tax assets, including the ability to carryback net operating losses, the existence of reversing temporary differences, the availability of tax planning strategies and available sources of future taxable income. We have also considered the ability to implement certain strategies that would, if necessary, be implemented to accelerate taxable income and use expiring deferred tax assets. We believe we are able to support the deferred tax assets recognized as of the end of the year based on all of the available evidence. The worldwide net deferred tax liability as of April 2, 2016 includes deferred tax liabilities related to amortizable tax basis in goodwill, which are indefinite lived and are not considered to be a source of taxable income. As of April 2, 2016, we maintain a valuation allowance against the portion of our U.S. net deferred tax assets that are not more-likely-than-not realizable and a full valuation allowance against the net deferred tax assets of certain foreign subsidiaries. At April 2, 2016, we have U.S. federal net operating loss carry-forwards of approximately $29.2 million, U.S. state net operating loss carry-forwards of $33.1 million, federal tax credit carry-forwards of $13.7 million and state tax credit carry-forwards of $3.8 million that are available to reduce future taxable income. A portion of the federal net operating losses are subject to an annual limitation due to the ownership change limitations set forth under Internal Revenue Code Sections 382. Certain of the aforementioned amounts have not been recognized because they relate to excess stock based compensation. At April 2, 2016, $4.0 million of the federal net operating loss carry-forwards, $5.3 million of the state net operating loss carry-forwards, none of the federal tax credit carry-forwards and none of the state tax credit carry-forwards relate to excess stock based compensation tax deductions for which the benefit will be recorded to additional paid-in capital when recognized. The federal and state net operating losses begin to expire in 2022 and 2019, respectively. The federal and state tax credits begin to expire in 2023 and 2025, respectively. As of April 2, 2016, we have foreign net operating losses of approximately $25.2 million that are available to reduce future income, of which $12.2 million would expire in 2023 and $0.1 million would expire in 2025, with the remaining foreign net operating losses having unlimited carryforward. As of April 2, 2016, we have provided $0.7 million of U.S. deferred taxes on approximately $5.4 million of unremitted earnings which are not indefinitely reinvested. Of this amount, $0.3 million affected the Company's effective tax rate in fiscal 2016. We have not provided U.S. deferred income taxes or foreign withholding taxes on unremitted earnings of foreign subsidiaries of approximately $254.1 million as such amounts are considered to be indefinitely reinvested in the business. The accumulated earnings in the foreign subsidiaries are primarily utilized to fund working capital requirements as our subsidiaries continue to expand their operations, to service existing debt obligations and to fund future foreign acquisitions. We do not believe it is practicable to estimate the amount of income taxes payable on the earnings that are indefinitely reinvested in foreign operations. The income tax provision from continuing operations differs from tax provision computed at the 35.0% U.S. federal statutory income tax rate due to the following:
(In thousands) | April 2, 2016 |  | March 28, 2015 |  | March 29, 2014
Tax at federal statutory rate | $ | (18,695 | ) |  | 35.0 | % |  | $ | 10,907 |  |  | 35.0 | % |  | $ | 12,739 |  |  | 35.0 | %
Difference between U.S. and foreign tax | 10,645 |  |  | (19.9 | )% |  | (6,929 | ) |  | (22.2 | )% |  | (10,846 | ) |  | (29.8 | )%
State income taxes net of federal benefit | 134 |  |  | (0.3 | )% |  | (818 | ) |  | (2.6 | )% |  | (252 | ) |  | (0.7 | )%
Change in uncertain tax positions | (1,820 | ) |  | 3.4 | % |  | (1,762 | ) |  | (5.7 | )% |  | (1,678 | ) |  | (4.6 | )%
Intercompany loan deduction | — |  |  | — | % |  | — |  |  | — | % |  | (2,185 | ) |  | (6.0 | )%
Unremitted earnings | 735 |  |  | (1.4 | )% |  | — |  |  | — | % |  | — |  |  | — | %
Deferred statutory rate changes | (2,653 | ) |  | 5.0 | % |  | — |  |  | — | % |  | — |  |  | — | %
Non-deductible goodwill impairment | 2,861 |  |  | (5.4 | )% |  | — |  |  | — | % |  | — |  |  | — | %
Non-deductible expenses | 1,491 |  |  | (2.8 | )% |  | 1,237 |  |  | 4.0 | % |  | 1,035 |  |  | 2.8 | %
Research credits | (672 | ) |  | 1.3 | % |  | (1,000 | ) |  | (3.2 | )% |  | (688 | ) |  | (1.9 | )%
Tax amortization of goodwill | 4,185 |  |  | (7.8 | )% |  | 3,826 |  |  | 12.3 | % |  | — |  |  | — | %
Valuation allowance | 5,194 |  |  | (9.7 | )% |  | 8,524 |  |  | 27.4 | % |  | 2,400 |  |  | 6.6 | %
Other, net | 758 |  |  | (1.4 | )% |  | 283 |  |  | 0.8 | % |  | 728 |  |  | 2.0 | %
Income tax provision | $ | 2,163 |  |  | (4.0 | )% |  | $ | 14,268 |  |  | 45.8 | % |  | $ | 1,253 |  |  | 3.4 | %
We recorded an income tax provision of $2.2 million, representing an effective tax rate of (4)%. The effective tax rate of (4)% differs from the U.S. statutory rate of 35.0% primarily as a result of the jurisdictional mix of earnings and losses generated in the U.S. and certain foreign subsidiaries that have a valuation allowance and therefore cannot be benefited. Other significant items impacting the rate include the tax provision related to the amortization of U.S. goodwill for tax purposes which gives rise to an indefinite lived deferred tax liability, a tax benefit related to deferred tax rate changes primarily associated with the decrease in the statutory rate applied to the deferred tax liability associated with goodwill for our Puerto Rico subsidiary and releases of tax reserves for uncertain tax positions. During the current year we changed our indefinite reinvestment assertion with respect to a portion of the unremitted earnings of our foreign subsidiaries. We have recorded a $0.3 million tax provision associated with the portion of unremitted foreign earnings that are not considered indefinitely reinvested. Unrecognized Tax Benefits Unrecognized tax benefits represent uncertain tax positions for which reserves have been established. As of April 2, 2016, we had $2.5 million of unrecognized tax benefits, of which $0.6 million would impact the effective tax rate, if recognized. As of March 28, 2015, we had $7.1 million of unrecognized tax benefits, of which $2.0 million would impact the effective tax rate, if recognized. At March 29, 2014, we had $5.6 million of unrecognized tax benefits, all of which would impact the effective tax rate, if recognized. During the fiscal year ended April 2, 2016 our unrecognized tax benefits were decreased by $4.5 million primarily due to the release of certain previously established reserves as a result of accounting method changes that were filed during the year, as well as the release of other reserves as a result of the closure of tax statutes of limitations. The following table summarizes the activity related to our gross unrecognized tax benefits for the fiscal years ended April 2, 2016, March 28, 2015 and March 29, 2014:
(In thousands) | April 2, 2016 |  | March 28, 2015 |  | March 29, 2014
Beginning Balance | $ | 7,070 |  |  | $ | 5,604 |  |  | $ | 6,930 |
Additions based upon positions related to the current year | — |  |  | — |  |  | — |
Additions for tax positions of prior years | 340 |  |  | 3,234 |  |  | 990 |
Reductions of tax positions | (4,158 | ) |  | — |  |  | — |
Settlements with taxing authorities | — |  |  | (338 | ) |  | — |
Closure of statute of limitations | (729 | ) |  | (1,430 | ) |  | (2,316 | )
Ending Balance | $ | 2,523 |  |  | $ | 7,070 |  |  | $ | 5,604 |
As of April 2, 2016 we anticipate that the liability for unrecognized tax benefits for uncertain tax positions could change by up to $0.4 million in the next twelve months, as a result of closure of various statutes of limitations. Our historic practice has been and continues to be to recognize interest and penalties related to Federal, state and foreign income tax matters in income tax expense. Approximately $0.4 million and $0.7 million of gross interest and penalties were accrued at April 2, 2016 and March 28, 2015, respectively and is not included in the amounts above. There was a benefit included in tax expense associated with accrued interest and penalties of $0.3 million, $0.3 million and zero for the periods ended April 2, 2016, March 28, 2015 and March 29, 2014, respectively. We conduct business globally and, as a result, file consolidated and separate Federal, state and foreign income tax returns in multiple jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. With a few exceptions, we are no longer subject to U.S. federal, state, or local income tax examinations for years before 2012 and foreign income tax examinations for years before 2011.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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