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INCOME TAXES | 12 Months Ended
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Apr. 01, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Domestic and foreign income before provision for income tax is as follows:
(In thousands) | 2017 |  | 2016 |  | 2015
Domestic | $ | (44,724 | ) |  | $ | (18,526 | ) |  | $ | (17,265 | )
Foreign | 17,248 |  |  | (34,890 | ) |  | 48,430 |
Total | $ | (27,476 | ) |  | $ | (53,416 | ) |  | $ | 31,165 |
The income tax provision from continuing operations contains the following components:
(In thousands) | 2017 |  | 2016 |  | 2015
Current |  |  |  |  |  |  |  |
Federal | $ | (1,424 | ) |  | $ | 12 |  |  | $ | 3,526 |
State | 436 |  |  | (660 | ) |  | 898 |
Foreign | 6,580 |  |  | 3,842 |  |  | 5,614 |
Total current | $ | 5,592 |  |  | $ | 3,194 |  |  | $ | 10,038 |
Deferred |  |  |  |  |  |  |  |
Federal | (8,711 | ) |  | 3,532 |  |  | 1,227 |
State | (953 | ) |  | 319 |  |  | 3,215 |
Foreign | 2,864 |  |  | (4,882 | ) |  | (212 | )
Total deferred | $ | (6,800 | ) |  | $ | (1,031 | ) |  | $ | 4,230 |
Total | $ | (1,208 | ) |  | $ | 2,163 |  |  | $ | 14,268 |
Our subsidiary in Puerto Rico has been granted a fifteen year tax grant which expires in calendar 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 fiscal 2018. Our subsidiary in Malaysia has been granted a full income tax exemption to manufacture whole blood and apheresis devices that could be in effect for up to ten years, provided certain conditions are satisfied. The income tax exemption was in effect beginning June 1, 2016. Tax affected, significant temporary differences comprising the net deferred tax liability are as follows:
(In thousands) | April 1, 2017 |  | April 2, 2016
Deferred tax assets: |  |  |
Depreciation | $ | 934 |  |  | $ | 1,749 |
Amortization of intangibles | 1,150 |  |  | 4,417 |
Inventory | 7,419 |  |  | 7,607 |
Hedging | — |  |  | 382 |
Accruals, reserves and other deferred tax assets | 13,907 |  |  | 12,590 |
Net operating loss carry-forward | 11,742 |  |  | 13,484 |
Stock based compensation | 6,014 |  |  | 9,622 |
Tax credit carry-forward, net | 17,852 |  |  | 16,191 |
Gross deferred tax assets | 59,018 |  |  | 66,042 |
Less valuation allowance | (25,872 | ) |  | (24,297 | )
Total deferred tax assets (after valuation allowance) | 33,146 |  |  | 41,745 |
Deferred tax liabilities: |  |  |
Depreciation | (30,422 | ) |  | (28,972 | )
Amortization of goodwill and intangibles | (7,732 | ) |  | (23,626 | )
Unremitted earnings | (1,065 | ) |  | (700 | )
Other deferred tax liabilities | (2,053 | ) |  | (2,769 | )
Total deferred tax liabilities | (41,272 | ) |  | (56,067 | )
Net deferred tax liabilities | $ | (8,126 | ) |  | $ | (14,322 | )
The valuation allowance increased by $1.6 million during fiscal 2017, primarily as the result of discrete valuation allowance establishments in several of our foreign subsidiaries, current year income and loss 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 and the impact of foreign exchange. In determining the need for a valuation allowance, we have given consideration for our worldwide cumulative loss position, resulting from significant impairment and restructuring charges incurred in fiscal 2017 and 2016, when assessing the weight of the sources of taxable income that can be used to support the realizability of our deferred tax assets. We have assessed, on a jurisdictional basis, the available means of recovering deferred tax assets, including the ability to carry-back 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 1, 2017 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 1, 2017, we maintain a valuation allowance against 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. As of April 1, 2017, we have U.S. federal net operating loss carry-forwards of approximately $23.3 million, U.S. state net operating loss carry-forwards of $33 million, federal tax credit carry-forwards of $15.1 million and state tax credit carry-forwards of $4.2 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 1, 2017, $4.0 million of the federal net operating loss carry-forwards, $5.2 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. We will record these off balance sheet net operating losses as a deferred tax asset, offset with an increase in the valuation allowance upon the adoption of ASU 2016-09. The federal and state net operating losses begin to expire in fiscal 2022 and 2019, respectively. The federal and state tax credits begin to expire in fiscal 2024 and 2025, respectively. Our net operating loss and tax credit carry-forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent as defined under Section 382 and 383 of the U.S. Internal Revenue Code of 1986, respectively, as well as similar state provisions. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carry-forward to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. As of April 1, 2017, we have foreign net operating losses of approximately $19.2 million that are available to reduce future income having unlimited carry-forward. As of April 1, 2017, we have provided $1.1 million of U.S. deferred taxes on approximately $8.4 million of unremitted earnings which are not indefinitely reinvested. Of this amount, $0.1 million affected the Company's effective tax rate in fiscal 2017. We have not provided U.S. deferred income taxes or foreign withholding taxes on unremitted earnings of foreign subsidiaries of approximately $233.0 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) | 2017 |  | 2016 |  | 2015
Tax at federal statutory rate | $ | (9,616 | ) |  | 35.0 | % |  | $ | (18,695 | ) |  | 35.0 | % |  | $ | 10,907 |  |  | 35.0 | %
Difference between U.S. and foreign tax | 137 |  |  | (0.5 | )% |  | 10,645 |  |  | (19.9 | )% |  | (6,929 | ) |  | (22.2 | )%
State income taxes net of federal benefit | (495 | ) |  | 1.8 | % |  | 134 |  |  | (0.3 | )% |  | (818 | ) |  | (2.6 | )%
Change in uncertain tax positions | 862 |  |  | (3.1 | )% |  | (1,820 | ) |  | 3.4 | % |  | (1,762 | ) |  | (5.7 | )%
Unremitted earnings | 330 |  |  | (1.2 | )% |  | 735 |  |  | (1.4 | )% |  | — |  |  | — | %
Deferred statutory rate changes | (383 | ) |  | 1.4 | % |  | (2,653 | ) |  | 5.0 | % |  | — |  |  | — | %
Non-deductible goodwill impairment | 3,703 |  |  | (13.5 | )% |  | 2,861 |  |  | (5.4 | )% |  | — |  |  | — | %
Non-deductible expenses | 896 |  |  | (3.2 | )% |  | 1,491 |  |  | (2.8 | )% |  | 1,237 |  |  | 4.0 | %
Research credits | (561 | ) |  | 2.0 | % |  | (672 | ) |  | 1.3 | % |  | (1,000 | ) |  | (3.2 | )%
Tax amortization of goodwill | (10,564 | ) |  | 38.4 | % |  | 4,185 |  |  | (7.8 | )% |  | 3,826 |  |  | 12.3 | %
Valuation allowance | 13,505 |  |  | (49.2 | )% |  | 5,194 |  |  | (9.7 | )% |  | 8,524 |  |  | 27.4 | %
Other, net | 978 |  |  | (3.5 | )% |  | 758 |  |  | (1.4 | )% |  | 283 |  |  | 0.8 | %
Income tax (benefit) provision | $ | (1,208 | ) |  | 4.4 | % |  | $ | 2,163 |  |  | (4.0 | )% |  | $ | 14,268 |  |  | 45.8 | %
We recorded an income tax benefit of $1.2 million, representing an effective tax rate of 4.4%. The effective tax rate 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 and the current year goodwill impairments. We have recorded a $0.1 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 1, 2017, we had $3.4 million of unrecognized tax benefits, of which $1.5 million would impact the effective tax rate, if recognized. 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. At March 28, 2015, we had $7.1 million of unrecognized tax benefits, all of which $2.0 million would impact the effective tax rate, if recognized. During the fiscal year ended April 1, 2017 our unrecognized tax benefits were increased by $0.8 million. An increase of $1.3 million in our uncertain tax positions was triggered by a reduction in workforce which impacts a previously negotiated tax holiday that requires us to maintain certain levels of headcount for a multi-year period. The establishment of this tax reserve is offset by 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 1, 2017, April 2, 2016 and March 28, 2015:
(In thousands) | April 1, 2017 |  | April 2, 2016 |  | March 28, 2015
Beginning Balance | $ | 2,523 |  |  | $ | 7,070 |  |  | $ | 5,604 |
Additions for tax positions of prior years | 1,279 |  |  | 340 |  |  | 3,234 |
Reductions of tax positions | (29 | ) |  | (4,158 | ) |  | — |
Settlements with taxing authorities | — |  |  | — |  |  | (338 | )
Closure of statute of limitations | (403 | ) |  | (729 | ) |  | (1,430 | )
Ending Balance | $ | 3,370 |  |  | $ | 2,523 |  |  | $ | 7,070 |
As of April 1, 2017 we anticipate that the liability for unrecognized tax benefits for uncertain tax positions could change by up to $1.5 million in the next twelve months, as a result of closure of various statutes of limitations and potential settlements with tax authorities. 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 $0.2 million and $0.4 million of gross interest and penalties were accrued at April 1, 2017 and April 2, 2016, respectively, and is not included in the amounts above. There was a benefit included in tax expense associated with accrued interest and penalties of $0.2 million, $0.3 million and $0.3 million for the periods ended April 1, 2017, April 2, 2016 and March 28, 2015, 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 fiscal 2014 and foreign income tax examinations for years before fiscal 2012. To the extent that we have tax attribute carry-forwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state, or foreign tax authorities to the extent utilized in a future period.

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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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