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INCOME TAXES | 12 Months Ended
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Mar. 30, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Domestic and foreign income before provision (benefit) for income tax is as follows:
(In thousands) | 2024 |  | 2023 |  | 2022
Domestic | $ | 112,563 |  |  | $ | 85,657 |  |  | $ | (5,219) |
Foreign | 39,302 |  |  | 55,746 |  |  | 68,848 |
Total | $ | 151,865 |  |  | $ | 141,403 |  |  | $ | 63,629 |
The income tax provision (benefit) from continuing operations contains the following components:
(In thousands) | 2024 |  | 2023 |  | 2022
Current |  |  |  |  |
Federal | $ | 29,113 |  |  | $ | 6,461 |  |  | $ | 3,586 |
State | 6,539 |  |  | 4,824 |  |  | 1,682 |
Foreign | 9,532 |  |  | 8,940 |  |  | 9,940 |
Total current | $ | 45,184 |  |  | $ | 20,225 |  |  | $ | 15,208 |
Deferred |  |  |  |  |
Federal | (6,165) |  |  | 14,298 |  |  | 3,455 |
State | 2,132 |  |  | (7,678) |  |  | 310 |
Foreign | (6,844) |  |  | (843) |  |  | 1,281 |
Total deferred | $ | (10,877) |  |  | $ | 5,777 |  |  | $ | 5,046 |
Total | $ | 34,307 |  |  | $ | 26,002 |  |  | $ | 20,254 |
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) | March 30, 2024 |  | April 1, 2023
Deferred tax assets: |  |  |
Depreciation | $ | 1,817 |  |  | $ | 174 |
Amortization of intangibles | 3,715 |  |  | 1,013 |
Inventory | 5,502 |  |  | 7,674 |
Accruals, reserves and other deferred tax assets | 18,777 |  |  | 15,680 |
Net operating loss carry-forward | 16,221 |  |  | 20,996 |
Stock based compensation | 3,965 |  |  | 4,230 |
Operating lease liabilities | 16,132 |  |  | 15,851 |
Tax credit carry-forward, net | 7,766 |  |  | 5,072 |
Capitalized research expenses | 31,370 |  |  | 19,671 |
Gross deferred tax assets | 105,265 |  |  | 90,361 |
Less valuation allowance | (10,239) |  |  | (8,838) |
Total deferred tax assets (after valuation allowance) | 95,026 |  |  | 81,523 |
Deferred tax liabilities: |  |  |
Depreciation | (35,279) |  |  | (37,400) |
Amortization of goodwill and intangibles | (96,597) |  |  | (57,752) |
Unremitted earnings | (1,334) |  |  | (1,163) |
Operating lease assets | (13,341) |  |  | (13,220) |
Other deferred tax liabilities | (3,380) |  |  | (2,942) |
Total deferred tax liabilities | (149,931) |  |  | (112,477) |
Net deferred tax liabilities | $ | (54,905) |  |  | $ | (30,954) |
The increase in the worldwide net deferred tax liability is primarily due to the acquisition of intangibles with book basis in excess of tax basis during fiscal 2024, partially offset by research expenditures capitalized for tax purposes. The valuation allowance increase of $1.4 million during fiscal 2024 is primarily due to acquired foreign deferred tax assets for which the valuation allowance was recorded in acquisition accounting and changes in the valuation allowance in certain foreign 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. 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 March 30, 2024 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 deferred tax assets. As of March 30, 2024, the Company maintains a valuation allowance against certain U.S. federal tax credit carryforwards and U.S. state net operating loss and 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 Medical, Inc., 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 remaining carryforwards disclosed in the deferred tax table above 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 from March 2, 2021 through March 30, 2024 that would result in a limitation. Subsequent ownership changes may further affect the limitation in future years. As of March 30, 2024, the Company has U.S. federal net operating loss carryforwards of $28.2 million of which $8.2 million will begin to expire in fiscal 2025 and $20.0 million can be carried forward indefinitely. The Company has U.S. state net operating losses of $56.3 million of which $51.0 million will expire at various times between fiscal 2025 and fiscal 2040 and $5.3 million can be carried forward indefinitely. The Company has federal and state tax credits of $0.6 million and $5.5 million, respectively, which will begin to expire in fiscal 2029 and fiscal 2028, respectively. As of March 30, 2024, the Company has Canadian federal and provincial net operating loss carryforwards of $19.6 million and $21.2 million, respectively, which will expire from fiscal 2036 through fiscal 2044. The Company has other foreign net operating losses of approximately $4.0 million that are available to reduce future income which can be carried forward indefinitely. The Company has foreign research tax credits of $3.5 million which will begin to expire in fiscal 2027. As of March 30, 2024, 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 $96.3 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 differs from the tax provision computed at the U.S. federal statutory income tax rate due to the following:
(In thousands) | 2024 |  | 2023 |  | 2022
Tax at federal statutory rate | $ | 31,892 |  |  | 21.0 | % |  | $ | 29,695 |  |  | 21.0 | % |  | $ | 13,362 |  |  | 21.0 | %
Impact of foreign operations | (3,631) |  |  | (2.4) | % |  | (2,408) |  |  | (1.7) | % |  | (3,799) |  |  | (6.0) | %
State income taxes net of federal benefit | 7,037 |  |  | 4.6 | % |  | 2,939 |  |  | 2.1 | % |  | 1,384 |  |  | 2.2 | %
Change in uncertain tax positions | (107) |  |  | (0.1) | % |  | 81 |  |  | 0.1 | % |  | (777) |  |  | (1.2) | %
Global intangible low taxed income | (555) |  |  | (0.4) | % |  | (828) |  |  | (0.6) | % |  | 3,608 |  |  | 5.7 | %
Unremitted earnings | 171 |  |  | 0.1 | % |  | (91) |  |  | (0.1) | % |  | 194 |  |  | 0.3 | %
Deferred statutory rate changes | (159) |  |  | (0.1) | % |  | 82 |  |  | 0.1 | % |  | 40 |  |  | 0.1 | %
Non-deductible executive compensation | 3,256 |  |  | 2.1 | % |  | 1,439 |  |  | 1.0 | % |  | 1,080 |  |  | 1.7 | %
Non-deductible expenses | 2,355 |  |  | 1.6 | % |  | 827 |  |  | 0.6 | % |  | 741 |  |  | 1.2 | %
Stock compensation shortfalls (benefits) | (1,841) |  |  | (1.2) | % |  | 1,883 |  |  | 1.3 | % |  | 2,070 |  |  | 3.3 | %
Research credits | (1,378) |  |  | (0.9) | % |  | (2,073) |  |  | (1.5) | % |  | (1,496) |  |  | (2.4) | %
Contingent consideration | — |  |  | — | % |  | — |  |  | — | % |  | 1,880 |  |  | 3.0 | %
Impact of foreign tax law changes | (2,739) |  |  | (1.8) | % |  | — |  |  | — | % |  | — |  |  | — | %
Valuation allowance | (393) |  |  | (0.2) | % |  | (5,135) |  |  | (3.6) | % |  | 254 |  |  | 0.2 | %
Other, net | 399 |  |  | 0.3 | % |  | (409) |  |  | (0.3) | % |  | 1,713 |  |  | 2.7 | %
Income tax provision | $ | 34,307 |  |  | 22.6 | % |  | $ | 26,002 |  |  | 18.4 | % |  | $ | 20,254 |  |  | 31.8 | %
The Company recorded an income tax expense of $34.3 million, representing an effective tax rate of 22.6%. The effective tax rate is higher than the U.S. statutory rate of 21.0%, primarily due to state taxes, non-deductible executive compensation and disallowed stock compensation expense, partially offset by jurisdictional mix of earnings, impact of foreign tax law changes and research credits generated. Unrecognized Tax Benefits Unrecognized tax benefits represent uncertain tax positions for which reserves have been established. As of March 30, 2024, the Company had $3.7 million of unrecognized tax benefits, of which $3.1 million would impact the effective tax rate, if recognized. 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. The following table summarizes the activity related to its gross unrecognized tax benefits for the fiscal years ended March 30, 2024, April 1, 2023 and April 2, 2022:
(In thousands) | March 30, 2024 |  | April 1, 2023 |  | April 2, 2022
Beginning Balance | $ | 3,941 |  |  | $ | 3,939 |  |  | $ | 6,107 |
Additions for tax positions of current year | 234 |  |  | 292 |  |  | 219 |
Reductions of tax positions | (198) |  |  | (290) |  |  | (808) |
Settlements of tax positions | — |  |  | — |  |  | (1,579) |
Expiration of statute of limitations | (234) |  |  | — |  |  | — |
Ending Balance | $ | 3,743 |  |  | $ | 3,941 |  |  | $ | 3,939 |
As of March 30, 2024, the Company anticipates that the liability for unrecognized tax benefits for uncertain tax positions could change by up to $2.5 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 $0.3 million and $0.2 million of gross interest and penalties were accrued at March 30, 2024 and April 1, 2023, respectively, and are not included in the amounts above. Additionally, $0.1 million of accrued interest and penalties was included in income tax provision for each of the years ended March 30, 2024, April 1, 2023 and April 2, 2022. 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 2021 and foreign income tax examinations for years before fiscal 2019. 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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