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INCOME TAXES | 12 Months Ended
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Mar. 30, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Domestic and foreign income before provision for income tax is as follows:
(In thousands) | 2019 |  | 2018 |  | 2017
Domestic | $ | 26,665 |  |  | $ | 3,534 |  |  | $ | (44,724 | )
Foreign | 46,968 |  |  | 56,098 |  |  | 17,248 |
Total | $ | 73,633 |  |  | $ | 59,632 |  |  | $ | (27,476 | )
The income tax provision from continuing operations contains the following components:
(In thousands) | 2019 |  | 2018 |  | 2017
Current |  |  |  |  |  |  |  |
Federal | $ | (4,165 | ) |  | $ | 9,927 |  |  | $ | (1,424 | )
State | 844 |  |  | 1,024 |  |  | 436 |
Foreign | 8,584 |  |  | 8,937 |  |  | 6,580 |
Total current | $ | 5,263 |  |  | $ | 19,888 |  |  | $ | 5,592 |
Deferred |  |  |  |  |  |  |  |
Federal | 12,220 |  |  | (5,350 | ) |  | (8,711 | )
State | 463 |  |  | 344 |  |  | (953 | )
Foreign | 668 |  |  | (822 | ) |  | 2,864 |
Total deferred | $ | 13,351 |  |  | $ | (5,828 | ) |  | $ | (6,800 | )
Total | $ | 18,614 |  |  | $ | 14,060 |  |  | $ | (1,208 | )
The Company conducts business globally and reports its results of operations in a number of foreign jurisdictions in addition to the United States. The Company's reported tax rate is impacted by the jurisdictional mix of earnings in any given period as the foreign jurisdictions in which it operates have tax rates that differ from the U.S. statutory tax rate. During the third quarter of fiscal 2018, the Tax Cuts and Jobs Act (the "Act") was enacted in the United States. The Act reduced the U.S. federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings. In addition, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act that directed taxpayers to consider the impact of the U.S. legislation as “provisional” when they do not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete their accounting for the change in tax law. During fiscal 2018, the Company recognized a provisional amount of $2.0 million as a reasonable estimate of the impact of the provisions of the Act, which was included as a component of income tax expense in the consolidated statements of income (loss). During fiscal 2019, the Company completed its accounting for the tax effects of the enactment of the Act. The Company recognized a $0.4 million adjustment to the provisional tax expense recorded in fiscal 2018. The Company has incorporated the other impacts of the Act that became effective in fiscal 2019 in the calculation of the tax provision and effective tax rate, including the provisions related to global intangible low taxed income (“GILTI”), foreign derived intangible income (“FDII”), base erosion anti abuse Tax (“BEAT”), as well as other provisions which limit tax deductibility of expenses. For fiscal 2019, the GILTI provisions have the most significant impact to the Company. Under the new law, U.S. taxes are imposed on foreign income in excess of a deemed return on tangible assets of its foreign subsidiaries. The ability to benefit a deduction and foreign tax credits against a portion of the GILTI income may be limited under the GILTI rules as a result of the utilization of net operating losses, foreign sourced income, and other potential limitations within the foreign tax credit calculation. Interpretive guidance on the accounting for GILTI states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis 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 as a period expense only. For the year ended March 30, 2019, the Company made the accounting policy election to recognize GILTI as a period expense. The Company's subsidiary in Puerto Rico has been granted a fifteen-year tax grant that expires in calendar 2027. Its qualification for the tax grant is dependent on the continuation of its manufacturing activities in Puerto Rico. The Company benefits from a reduced tax rate on its earnings in Puerto Rico under the tax grant. The Company's 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) | March 30, 2019 |  | March 31, 2018
Deferred tax assets: |  |  |
Depreciation | $ | 2,277 |  |  | $ | 1,345 |
Amortization of intangibles | 1,091 |  |  | 964 |
Inventory | 3,541 |  |  | 3,183 |
Accruals, reserves and other deferred tax assets | 15,802 |  |  | 16,939 |
Net operating loss carry-forward | 4,931 |  |  | 10,810 |
Stock based compensation | 3,728 |  |  | 3,292 |
Tax credit carry-forward, net | 4,176 |  |  | 3,479 |
Gross deferred tax assets | 35,546 |  |  | 40,012 |
Less valuation allowance | (11,322 | ) |  | (11,090 | )
Total deferred tax assets (after valuation allowance) | 24,224 |  |  | 28,922 |
Deferred tax liabilities: |  |  |
Depreciation | (23,102 | ) |  | (17,732 | )
Amortization of goodwill and intangibles | (13,959 | ) |  | (11,942 | )
Unremitted earnings | (801 | ) |  | (274 | )
Other deferred tax liabilities | (1,909 | ) |  | (1,539 | )
Total deferred tax liabilities | (39,771 | ) |  | (31,487 | )
Net deferred tax liabilities | $ | (15,547 | ) |  | $ | (2,565 | )
The valuation allowance increased by $0.2 million during fiscal 2019, primarily as a result of net operating losses and tax credits generated in jurisdictions in which the Company has concluded that its deferred tax assets are not more-likely-than-not realizable, offset by the release of the valuation allowance against deferred tax assets in certain foreign subsidiaries. The Company has 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. It has also considered the ability to implement certain strategies that would, if necessary, be implemented to accelerate taxable income and use expiring deferred tax assets. The Company believes it is 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 March 30, 2019 includes deferred tax liabilities related to amortizable tax basis in goodwill, which are indefinite lived and can only be used as a source of income to benefit other indefinite lived assets. As of March 30, 2019, the Company maintains a valuation allowance against certain U.S. state deferred tax assets that are not more-likely-than-not realizable and maintains a full valuation allowance against the net deferred tax assets of certain foreign subsidiaries. As of March 30, 2019, the Company has U.S. federal net operating losses of approximately $5.8 million that will begin to expire in fiscal 2036. The Company has U.S. state net operating losses of $21.7 million of which $21.3 million will begin to expire in fiscal 2020 and $0.4 million can be carried forward indefinitely. The Company has federal and state tax credits of $0.5 million and $4.7 million, respectively, which will begin to expire in fiscal 2039 and fiscal 2025, respectively. The Company's 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. The Company conducted a Section 382 study covering the period April 2, 2011 through December 31, 2017. The study concluded that there were no limitations on the Company’s net operating losses and tax credit carryforwards as of December 31, 2017. The Company does not believe it has had an ownership change through March 30, 2019. Subsequent ownership changes may further affect the limitation in future years. As of March 30, 2019, the Company has foreign net operating losses of approximately $12.6 million that are available to reduce future income of which $3.7 million will begin to expire in fiscal 2034 and $8.9 million can be carried forward indefinitely. As of March 30, 2019, substantially all of the unremitted earnings of the Company have been taxed in the U.S. as a result of tax reform. The Company has provided $0.8 million of net foreign withholding taxes on approximately $154.0 million of unremitted earnings that are not indefinitely reinvested. The Company has not provided U.S. deferred income taxes or foreign withholding taxes on unremitted earnings of foreign subsidiaries of approximately $287.9 million as such amounts are considered to be indefinitely reinvested in the business or could be remitted without a future tax cost. The accumulated earnings in the foreign subsidiaries are primarily utilized to fund working capital requirements as its subsidiaries continue to expand their operations, to service existing debt obligations and to fund future foreign acquisitions. The Company does 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 U.S. federal statutory income tax rate due to the following:
(In thousands) | 2019 |  | 2018 |  | 2017
Tax at federal statutory rate | $ | 15,463 |  |  | 21.0 | % |  | $ | 18,807 |  |  | 31.5 | % |  | $ | (9,616 | ) |  | 35.0 | %
Difference between U.S. and foreign tax | (1,423 | ) |  | (1.9 | )% |  | (9,264 | ) |  | (15.5 | )% |  | 137 |  |  | (0.5 | )%
State income taxes net of federal benefit | 902 |  |  | 1.2 | % |  | 29 |  |  | — | % |  | (495 | ) |  | 1.8 | %
Change in uncertain tax positions | 267 |  |  | 0.4 | % |  | 1,095 |  |  | 1.8 | % |  | 862 |  |  | (3.1 | )%
Global intangible low taxed income | 5,954 |  |  | 8.1 | % |  | — |  |  | — | % |  | — |  |  | — | %
Unremitted earnings | 527 |  |  | 0.7 | % |  | (791 | ) |  | (1.3 | )% |  | 330 |  |  | (1.2 | )%
Deferred statutory rate changes | 1,183 |  |  | 1.6 | % |  | (3,193 | ) |  | (5.4 | )% |  | (383 | ) |  | 1.4 | %
Non-deductible goodwill impairment | — |  |  | — | % |  | — |  |  | — | % |  | 3,703 |  |  | (13.5 | )%
Non-deductible executive compensation | 1,588 |  |  | 2.2 | % |  | 221 |  |  | 0.4 | % |  | 40 |  |  | (0.1 | )%
Non-deductible other | 462 |  |  | 0.6 | % |  | 22 |  |  | — | % |  | 856 |  |  | (3.1 | )%
Stock compensation benefits | (5,382 | ) |  | (7.3 | )% |  | (2,544 | ) |  | (4.3 | )% |  | — |  |  | — | %
Research credits | (768 | ) |  | (1.0 | )% |  | (763 | ) |  | (1.3 | )% |  | (561 | ) |  | 2.0 | %
One-time transition tax from tax reform | 26 |  |  | — | % |  | 25,798 |  |  | 43.3 | % |  | — |  |  | — | %
Tax amortization of goodwill | — |  |  | — | % |  | — |  |  | — | % |  | (10,564 | ) |  | 38.4 | %
Valuation allowance | (184 | ) |  | (0.3 | )% |  | (15,541 | ) |  | (25.9 | )% |  | 13,505 |  |  | (49.2 | )%
Other, net | (1 | ) |  | — | % |  | 184 |  |  | 0.3 | % |  | 978 |  |  | (3.5 | )%
Income tax provision (benefit) | $ | 18,614 |  |  | 25.3 | % |  | $ | 14,060 |  |  | 23.6 | % |  | $ | (1,208 | ) |  | 4.4 | %
The Company recorded an income tax provision of $18.6 million, representing an effective tax rate of 25.3%. The effective tax rate is higher than the U.S. statutory rate of 21.0% primarily as a result of the impact of GILTI, non-deductible executive compensation, and foreign losses not benefited, including an asset impairment expense of $21.2 million recorded in pretax income for which no tax benefit was recognized due to a valuation allowance maintained against its deferred tax assets in the impacted jurisdiction. Refer to Note 8, Property, Plant & Equipment, for additional details. The effective tax rate has been favorably impacted by excess stock compensation benefits, research tax credits generated, jurisdictional mix of earnings, and the release of valuation allowance against its net deferred tax assets in certain foreign jurisdictions. The Company has recorded $0.5 million tax expense related to unremitted foreign earnings that are not considered permanently reinvested. Unrecognized Tax Benefits Unrecognized tax benefits represent uncertain tax positions for which reserves have been established. As of March 30, 2019, the Company had $4.7 million of unrecognized tax benefits, of which $3.9 million would impact the effective tax rate, if recognized. As of March 31, 2018, the Company had $4.5 million of unrecognized tax benefits, of which $3.8 million would impact the effective tax rate, if recognized. At April 1, 2017, the Company had $3.4 million of unrecognized tax benefits, of which $1.5 million would impact the effective tax rate, if recognized. During the fiscal year ended March 30, 2019 the Company's unrecognized tax benefits were increased by $0.2 million, primarily relating to uncertain tax positions established against various federal and state tax credits. The following table summarizes the activity related to its gross unrecognized tax benefits for the fiscal years ended March 30, 2019, March 31, 2018 and April 1, 2017:
(In thousands) | March 30, 2019 |  | March 31, 2018 |  | April 1, 2017
Beginning Balance | $ | 4,450 |  |  | $ | 3,370 |  |  | $ | 2,523 |
Additions for tax positions of current year | 282 |  |  | 289 |  |  | — |
Additions for tax positions of prior years | — |  |  | 1,203 |  |  | 1,279 |
Reductions of tax positions | (52 | ) |  | (252 | ) |  | (29 | )
Closure of statute of limitations | (23 | ) |  | (160 | ) |  | (403 | )
Ending Balance | $ | 4,657 |  |  | $ | 4,450 |  |  | $ | 3,370 |
As of March 30, 2019, the Company anticipates that the liability for unrecognized tax benefits for uncertain tax positions could change by up to $1.3 million in the next twelve months, as a result of closure of various statutes of limitations and potential settlements with tax authorities. The Company's historical 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 of gross interest and penalties were accrued at both March 30, 2019 and March 31, 2018 and are not included in the amounts above. There was a nominal benefit included in tax expense for accrued interest and penalties during fiscal 2019, 2018 and 2017. The Company conducts business globally and, as a result, files federal, state and foreign income tax returns in multiple jurisdictions. In the normal course of business, it is subject to examination by taxing authorities throughout the world. With a few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations for years before fiscal 2016 and foreign income tax examinations for years before fiscal 2014. To the extent that the Company has 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://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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