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INCOME TAXES | 12 Months Ended
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Apr. 01, 2023
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Domestic and foreign income before provision (benefit) for income tax is as follows:
(In thousands) | 2023 |  | 2022 |  | 2021
Domestic | $ | 85,657 |  |  | $ | (5,219) |  |  | $ | 5,526 |
Foreign | 55,746 |  |  | 68,848 |  |  | 67,387 |
Total | $ | 141,403 |  |  | $ | 63,629 |  |  | $ | 72,913 |
The income tax provision (benefit) from continuing operations contains the following components:
(In thousands) | 2023 |  | 2022 |  | 2021
Current |  |  |  |  |
Federal | $ | 6,461 |  |  | $ | 3,586 |  |  | $ | (289) |
State | 4,824 |  |  | 1,682 |  |  | 1,256 |
Foreign | 8,940 |  |  | 9,940 |  |  | 13,319 |
Total current | $ | 20,225 |  |  | $ | 15,208 |  |  | $ | 14,286 |
Deferred |  |  |  |  |
Federal | 14,298 |  |  | 3,455 |  |  | (12,906) |
State | (7,678) |  |  | 310 |  |  | (2,436) |
Foreign | (843) |  |  | 1,281 |  |  | (5,500) |
Total deferred | $ | 5,777 |  |  | $ | 5,046 |  |  | $ | (20,842) |
Total | $ | 26,002 |  |  | $ | 20,254 |  |  | $ | (6,556) |
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. 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 effected, significant temporary differences comprising the net deferred tax liability are as follows:
(In thousands) | April 1, 2023 |  | April 2, 2022
Deferred tax assets: |  |  |
Depreciation | $ | 174 |  |  | $ | 623 |
Amortization of intangibles | 1,013 |  |  | 1,243 |
Inventory | 7,674 |  |  | 6,841 |
Accruals, reserves and other deferred tax assets | 15,680 |  |  | 13,020 |
Net operating loss carry-forward | 20,996 |  |  | 30,212 |
Stock based compensation | 4,230 |  |  | 4,422 |
Operating lease liabilities | 15,851 |  |  | 15,777 |
Tax credit carry-forward, net | 5,072 |  |  | 6,452 |
Capitalized research expenses | 19,671 |  |  | 6,733 |
Gross deferred tax assets | 90,361 |  |  | 85,323 |
Less valuation allowance | (8,838) |  |  | (14,077) |
Total deferred tax assets (after valuation allowance) | 81,523 |  |  | 71,246 |
Deferred tax liabilities: |  |  |
Depreciation | (37,400) |  |  | (15,727) |
Amortization of goodwill and intangibles | (57,752) |  |  | (63,004) |
Unremitted earnings | (1,163) |  |  | (1,254) |
Operating lease assets | (13,220) |  |  | (12,877) |
Other deferred tax liabilities | (2,942) |  |  | (2,643) |
Total deferred tax liabilities | (112,477) |  |  | (95,505) |
Net deferred tax liabilities | $ | (30,954) |  |  | $ | (24,259) |
The increase in the worldwide net deferred tax liability is primarily due to tax depreciation deductions in excess of book depreciation expense during fiscal 2023 and utilization of net operating loss carryforwards, partially offset by research expenditures capitalized for tax purposes and impact of the release of valuation allowance previously maintained against certain U.S. state and foreign deferred tax assets. The valuation allowance decrease of $5.2 million during fiscal 2023 is primarily due to the release of valuation allowance related to certain U.S. state and foreign deferred tax assets and changes in the valuation allowance in other jurisdictions based on current year operating results. 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. Based upon cumulative profitability in the U.S. and Malaysia, and increases in future taxable income projections, management has determined there is sufficient positive evidence to release a portion of the valuation allowance previously provided against certain U.S. state and foreign deferred tax assets. The Company has concluded future taxable income can be considered a source of income to realize a benefit for deferred tax assets in certain jurisdictions. 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 April 1, 2023 includes deferred tax liabilities related to amortizable tax basis in goodwill and other indefinite lived assets, which can only be used as a source of income to benefit other indefinite lived assets. As of April 1, 2023, the Company maintains a valuation allowance against certain U.S. tax credit carryforwards that are not more-likely-than-not realizable as well as a valuation allowance against the net deferred tax assets of certain foreign subsidiaries. In connection with the March 2021 acquisition of Cardiva, the Company acquired federal and state net operating loss carryforwards of $150.9 million and $93.3 million, respectively. The Company also acquired federal and state tax research credit carryforwards of $0.2 million and $0.4 million, respectively. These net operating loss and tax credit carryforwards 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 of inception (July 2002) through March 1, 2021. The study concluded that ownership changes occurred during that period which limit the amount of the Company’s net operating losses and tax credit carryforwards that can be utilized before expiring. The carryforwards disclosed represent the amount of attributes that can be utilized based on the results of the study. The Company does not believe it has had an ownership change through April 1, 2023. Subsequent ownership changes may further affect the limitation in future years. As of April 1, 2023, the Company has U.S. federal net operating loss carryforwards of $64.4 million of which $8.4 million will begin to expire in fiscal 2024 and $56.0 million can be carried forward indefinitely. The Company has U.S. state net operating losses of $75.7 million of which $62.3 million will expire at various times between fiscal 2024 and fiscal 2040 and $13.4 million can be carried forward indefinitely. The Company has federal and state tax credits of $0.6 million and $5.4 million, respectively, which will begin to expire in fiscal 2029 and fiscal 2028, respectively. As of April 1, 2023, the Company has foreign net operating losses of approximately $10.5 million that are available to reduce future income of which $6.9 million will begin to expire in fiscal 2034 and $3.6 million can be carried forward indefinitely. As of April 1, 2023, substantially all of the unremitted earnings of the Company have been taxed in the U.S. The Company has not provided U.S. deferred income taxes or foreign withholding taxes on unremitted earnings of foreign subsidiaries of approximately $72.0 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 its subsidiaries continue to expand their operations 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, however a significant portion of the unremitted earnings could be remitted without a future tax cost. The income tax provision (benefit) from continuing operations differs from the tax provision (benefit) computed at the U.S. federal statutory income tax rate due to the following:
(In thousands) | 2023 |  | 2022 |  | 2021
Tax at federal statutory rate | $ | 29,695 |  |  | 21.0 | % |  | $ | 13,362 |  |  | 21.0 | % |  | $ | 15,312 |  |  | 21.0 | %
Impact of foreign operations | (2,408) |  |  | (1.7) | % |  | (3,799) |  |  | (6.0) | % |  | (7,049) |  |  | (9.7) | %
State income taxes net of federal benefit | 2,939 |  |  | 2.1 | % |  | 1,384 |  |  | 2.2 | % |  | (924) |  |  | (1.3) | %
Change in uncertain tax positions | 81 |  |  | 0.1 | % |  | (777) |  |  | (1.2) | % |  | 1,172 |  |  | 1.6 | %
Global intangible low taxed income | (828) |  |  | (0.6) | % |  | 3,608 |  |  | 5.7 | % |  | (758) |  |  | (1.0) | %
Unremitted earnings | (91) |  |  | (0.1) | % |  | 194 |  |  | 0.3 | % |  | 257 |  |  | 0.4 | %
Deferred statutory rate changes | 82 |  |  | 0.1 | % |  | 40 |  |  | 0.1 | % |  | (243) |  |  | (0.3) | %
Non-deductible executive compensation | 1,439 |  |  | 1.0 | % |  | 1,080 |  |  | 1.7 | % |  | 2,238 |  |  | 3.1 | %
Non-deductible expenses | 827 |  |  | 0.6 | % |  | 741 |  |  | 1.2 | % |  | 2,038 |  |  | 2.8 | %
Stock compensation shortfalls (benefits) | 1,883 |  |  | 1.3 | % |  | 2,070 |  |  | 3.3 | % |  | (5,504) |  |  | (7.5) | %
Research credits | (2,073) |  |  | (1.5) | % |  | (1,496) |  |  | (2.4) | % |  | (1,230) |  |  | (1.7) | %
Contingent consideration | — |  |  | — | % |  | 1,880 |  |  | 3.0 | % |  | — |  |  | — | %
Intercompany sale of intellectual property | — |  |  | — | % |  | — |  |  | — | % |  | (7,550) |  |  | (10.4) | %
Valuation allowance | (5,135) |  |  | (3.6) | % |  | 254 |  |  | 0.2 | % |  | (3,144) |  |  | (4.4) | %
Other, net | (409) |  |  | (0.3) | % |  | 1,713 |  |  | 2.7 | % |  | (1,171) |  |  | (1.6) | %
Income tax provision (benefit) | $ | 26,002 |  |  | 18.4 | % |  | $ | 20,254 |  |  | 31.8 | % |  | $ | (6,556) |  |  | (9.0) | %
The Company recorded an income tax expense of $26.0 million, representing an effective tax rate of 18.4%. The effective tax rate is lower than the U.S. statutory rate of 21.0%, primarily due to jurisdictional mix of earnings, research credits generated and the change in valuation allowance, partially offset by state taxes, non-deductible executive compensation and disallowed stock compensation expense. The Company has recorded an immaterial 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 April 1, 2023, the Company had $3.9 million of unrecognized tax benefits, of which $3.2 million would impact the effective tax rate, if recognized. As of April 2, 2022, the Company had $3.9 million of unrecognized tax benefits, of which $3.1 million would impact the effective tax rate, if recognized. At April 3, 2021, the Company had $6.1 million of unrecognized tax benefits, of which $5.3 million would impact the effective tax rate, if recognized. The following table summarizes the activity related to its gross unrecognized tax benefits for the fiscal years ended April 1, 2023, April 2, 2022 and April 3, 2021:
(In thousands) | April 1, 2023 |  | April 2, 2022 |  | April 3, 2021
Beginning Balance | $ | 3,939 |  |  | $ | 6,107 |  |  | $ | 4,620 |
Additions for tax positions of current year | 292 |  |  | 219 |  |  | 335 |
Additions for tax positions of prior years | — |  |  | — |  |  | 1,194 |
Reductions of tax positions | (290) |  |  | (808) |  |  | (42) |
Settlements of tax positions | — |  |  | (1,579) |  |  | — |
Ending Balance | $ | 3,941 |  |  | $ | 3,939 |  |  | $ | 6,107 |
As of April 1, 2023, the Company anticipates that the liability for unrecognized tax benefits for uncertain tax positions could change by up to $0.2 million in the next twelve months, as a result of closure of various statutes of limitations. 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 and $0.1 million of gross interest and penalties were accrued at April 1, 2023 and April 2, 2022, respectively, and are not included in the amounts above. Additionally, $0.1 million, $0.1 million and $0.9 million of accrued interest and penalties was included in income tax provision (benefit) for the years ended April 1, 2023, April 2, 2022 and April 3, 2021, respectively. 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 2020 and foreign income tax examinations for years before fiscal 2018. 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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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