Income Taxes

12 Months Ended

Mar. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

Income before income taxes for the Company's domestic and foreign operations is as follows:

	Fiscal Year Ended
	March 30, 2019		March 31, 2018		April 1,  2017
Domestic	$	115,747	$	116,513	$	94,629
Foreign		10,343		3,338		10,255
Total income before income taxes	$	126,090	$	119,851	$	104,884

The provision for income taxes consists of the following:

	Fiscal Year Ended
	March 30,  2019			March 31,  2018			April 1,  2017
Current tax expense:
Federal	$	18,200		$	28,555		$	21,903
State		2,908			1,313			887
Foreign		4,693			3,544			3,148
		25,801			33,412			25,938
Deferred tax expense:
Federal		(4,111	)		(273	)		8,299
State		(756	)		457			245
Foreign		(37	)		(886	)		(221	)
		(4,904	)		(702	)		8,323
Total income taxes	$	20,897		$	32,710		$	34,261

On December 22, 2017, the United States enacted significant changes to the U.S. tax law following the passage and signing of the TCJA. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a one-time repatriation tax on undistributed foreign earnings. The Act permanently reduces the U.S. corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017. The primary impacts of the TCJA reflected in the consolidated financial statements relate to the remeasurement of deferred tax assets and liabilities resulting from the change in the corporate rate and a one-time mandatory transition tax on accumulated earnings of foreign operations. The SEC provided guidance that allows the Company to record provisional amounts if the accounting assessment is incomplete for impacts of the Act, with the requirement that the accounting be finalized in a period not to exceed one year form the date of enactment. As of December 22, 2018 the Company has completed the accounting for the tax effects of the Act and there have been no material changes to previously recorded amounts.

No additional income tax provision has been made on any remaining undistributed foreign earnings not subject to the one-time net charge related to the taxation of unremitted foreign earnings or any additional outside basis difference as these amounts continue to be indefinitely reinvested in foreign operations.

One of the international tax law changes provided for with TCJA relates to the taxation of a corporation’s global intangible low-taxed income (“GILTI”) for tax years beginning after December 31, 2017. The Company has evaluated this provision of TCJA and the application of ASC 740, and does not believe that GILTI will have a significant impact.

An additional tax law change provided under TCJA introduced new rules for the treatment of certain foreign income, including FDII for tax years beginning after December 31, 2017. The Company has evaluated this provision of TCJA and believes that FDII results in a favorable impact on the application of ASC 740.

In addition to the impact of a full fiscal year with a lower U.S. federal statutory tax rate, the Company recorded a net tax benefit of $1,651 in fiscal 2019 resulting from the Tax Reform Act.

An analysis of the difference between the provision for income taxes and the amount computed by applying the U.S. statutory income tax rate to pre-tax income follows:

	Fiscal Year Ended
	March 30,  2019			March 31,  2018			April 1,  2017
Income taxes using U.S. federal statutory rate	$	26,479		$	37,825		$	36,710
State income taxes, net of federal benefit		1,714			1,221			676
Domestic production activities deduction		—			(1,374	)		(1,803	)
Revaluation of deferred tax liabilities due to federal rate change		282			(9,318	)		—
Stock-based compensation		(5,155	)		(4,905	)		—
Foreign rate differential		2,484			1,604			(662	)
Transition tax		(161	)		9,166			—
Research and development credits		(1,765	)		(1,293	)		(1,163	)
Foreign derived intangible income (FDII)		(1,772	)		—			—
U.S. unrecognized tax positions		(951	)		452			(290	)
Other - net		(258	)		(668	)		793
	$	20,897		$	32,710		$	34,261

Net deferred tax assets (liabilities) are comprised of the following:

	March 30, 2019			March 31,  2018
Deferred tax assets:
Postretirement benefits	$	560		$	577
Employee compensation accruals		4,034			1,620
Inventory		9,298			7,688
Stock compensation		4,734			4,917
Tax loss and credit carryforwards		9,863			4,952
State tax		1,270			1,134
Other		187			77
Total gross deferred tax assets		29,946			20,965
Valuation allowance		(3,643	)		(2,318	)
Total deferred tax assets	$	26,303		$	18,647

Deferred tax liabilities:
Property, plant and equipment	$	(16,312	)	$	(13,648	)
Pension		(388	)		(78	)
Intangible assets		(16,465	)		(16,670	)
Total deferred tax liabilities	$	(33,165	)	$	(30,396	)
Total net deferred liabilities	$	(6,862	)	$	(11,749	)

The Company evaluates deferred tax assets to ensure that the estimated future taxable income will be sufficient in character (i.e. capital versus ordinary income treatment), amount and timing to result in their recovery. After considering the positive and negative evidence, a valuation allowance has been recorded on foreign tax credits and on certain state credits and state net operating losses as it is more likely than not (i.e. greater than a 50% likelihood) that these items will not be utilized. For the Company’s fiscal year ended March 30, 2019 the valuation allowance increased by $1,325 which pertained to an increase of U.S. federal and state credits. For the Company’s fiscal year ended March 31, 2018 the valuation allowance increased by $1,400 which pertained to an increase of state credits. These valuation allowances are required because management has determined, based on financial projections and available tax strategies, that it is unlikely the net operating losses and credits will be utilized before they expire. If events or circumstances change, valuation allowances are adjusted at that time resulting in an income tax benefit or charge.

At March 30, 2019, the Company has state net operating losses in different jurisdictions at varying amounts up to $7,332, which expire at various dates through 2038. At March 30, 2019, the Company has U.S. federal and state credits in different jurisdictions at varying amounts up to $5,668 which will expire at various dates through 2039. At March 30, 2019, the Company has foreign credits in different jurisdictions at varying amounts up to $936 which will expire at various dates through 2038.

The TCJA required a mandatory deemed repatriation of certain undistributed earnings of the Company’s foreign operations as of December 31, 2017. If the earnings were distributed in the form of cash dividends, the Company would not be subject to additional U.S. income taxes but could be subject to foreign income and withholding taxes. Under accounting standards (ASC 740) a deferred tax liability is not recorded for the excess of the tax basis over the financial reporting (book) basis of an investment in a foreign subsidiary if the indefinite reinvestment criteria is met. A provision has not been made for additional U.S. and foreign taxes at March 30, 2019 on approximately $11,708 of undistributed earnings of foreign operations because the Company intends to reinvest these funds indefinitely to support foreign growth opportunities. It is not practicable to estimate the unrecognized deferred tax liability on these undistributed earnings. These earnings could become subject to additional tax under certain circumstances including, but not limited to, loans to the Company, or upon sale or pledging of the subsidiary’s stock.

Uncertain Tax Positions

Unrecognized income tax benefits represent income tax positions taken on income tax returns but not yet recognized in the consolidated financial statements. If recognized, substantially all of the unrecognized tax benefits for the Company’s fiscal years ended March 30, 2019 and March 31, 2018 would affect the effective income tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	March 30, 2019			March 31, 2018			April 1, 2017
Balance, beginning of year	$	11,935		$	13,775		$	14,297
Gross (decreases) increases – tax positions taken during a prior period		624			(2,475	)		(488	)
Gross increases – tax positions taken during the current period		2,697			1,146			1,280
Reductions due to settlement with taxing authorities		—			—			(223	)
Reductions due to lapse of the applicable statute of limitations		(1,777	)		(511	)		(1,091	)
Balance, end of year	$	13,479		$	11,935		$	13,775

The Company recognizes the interest and penalties accrued related to unrecognized tax benefits in income tax expense. The Company recognized expense of $45 and $284 and a benefit of $36 related to interest and penalties on its statement of operations for the fiscal years ended March 30, 2019, March 31, 2018 and April 1, 2017, respectively. The Company has approximately $1,193 and $1,148 of accrued interest and penalties at March 30, 2019 and March 31, 2018, respectively.

The Company believes it is reasonably possible that some of its unrecognized tax positions may be effectively settled by the end of the Company’s fiscal year ending March 28, 2020 due to the closing of audits and the statute of limitations expiring in varying jurisdictions. The decrease, pertaining primarily to federal and state credits and state tax, is estimated to be $1,197.

The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to state or foreign income tax examinations by tax authorities for years ending before April 2, 2005. The Company is no longer subject to U.S. federal tax examination by the Internal Revenue Service for years ending before March 28, 2016.