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Income Taxes | 12 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax provision consists of the following (amounts in millions):
| Year Ended March 31,
| 2018 |  | 2017 |  | 2016
Pretax Income: |  |  |  |  |
U.S. | $ | (127.3 | ) |  | $ | (279.3 | ) |  | $ | (75.5 | )
Foreign | 864.6 |  |  | 369.1 |  |  | 356.8 |
| $ | 737.3 |  |  | $ | 89.8 |  |  | $ | 281.3 |
Current expense (benefit): |  |  |  |  |
U.S. Federal | $ | 369.4 |  |  | $ | 21.3 |  |  | $ | (4.0 | )
State | 0.5 |  |  | 1.0 |  |  | (0.2 | )
Foreign | 60.8 |  |  | 23.8 |  |  | 22.0 |
Total current | $ | 430.7 |  |  | $ | 46.1 |  |  | $ | 17.8 |
Deferred expense (benefit): |  |  |  |  |  |  |  |
U.S. Federal | $ | 82.5 |  |  | $ | (114.7 | ) |  | $ | (42.2 | )
State | 0.1 |  |  | (5.4 | ) |  | (2.0 | )
Foreign | (31.4 | ) |  | (6.8 | ) |  | (16.2 | )
Total deferred | 51.2 |  |  | (126.9 | ) |  | (60.4 | )
Total Income tax provision (benefit) | $ | 481.9 |  |  | $ | (80.8 | ) |  | $ | (42.6 | )
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was enacted into law. The Act provides for numerous significant tax law changes and modifications including the reduction of the U.S. federal corporate income tax rate from 35.0% to 21.0%, the requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and the creation of new taxes on certain foreign-sourced earnings. As a fiscal year-end taxpayer, certain provisions of the Act began to impact the Company in the third quarter of fiscal 2018, while other provisions will impact the Company beginning in fiscal 2019. The corporate tax rate reduction is effective as of January 1, 2018. Since the Company has a fiscal year rather than a calendar year, it is subject to rules relating to transitional tax rates. As a result, the Company’s fiscal 2018 federal statutory rate will be a blended rate of 31.5%. Accounting Standards Codification ("ASC") 740, Income Taxes, requires companies to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin ("SAB") 118 which allows companies to record provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. The Company recorded a reasonable estimate when possible and with the understanding that the provisional amount is subject to further adjustments under SAB 118. In addition, for significant items for which the Company could not make a reasonable estimate, no provisional amounts were recorded. Amounts will be recorded during the measurement period allowed under SAB 118 when a reasonable estimate can be made, or when the effect of the Act is known. As of March 31, 2018, the Company made a reasonable estimate of the effects on the one-time transition tax, its existing deferred tax balances and the release of its valuation allowances on foreign tax credits due to the Act, and the Company recognized a provisional amount of income tax expense of $471.6 million, which decreased diluted net income per common share by $1.89 for the fiscal year ended March 31, 2018, and which was included as a component of income tax provision from continuing operations. The Company will continue to refine what the provisional balances and adjustments may be made under SAB 118 during the measurement period as a result of future changes in interpretation, information available, assumptions made by the Company and/or issuance of additional guidance and these adjustments could be material. The one-time transition tax is based on the Company's total post-1986 earnings and profits ("E&P") of its foreign subsidiaries. Substantially all of the Company's E&P were permanently reinvested outside the U.S prior to the Act. The Company recorded provisional U.S. amounts for its one-time transition tax liabilities, resulting in an increase in income tax provision of $653.7 million. In addition, the Company released the deferred tax liabilities related to non-permanently reinvested E&P, resulting in a decrease in income tax provision of $9.0 million. The net increase to tax provision is $644.7 million. The one-time transition tax may be elected to be paid over a period of eight years. The Company intends to make this election. The Company has not yet completed its calculation of the total post-1986 E&P for its foreign subsidiaries. The one-time transition tax is based in part on the amount of those earnings held in cash and other specified assets either as of the end of fiscal 2018 or the average of the year-end balances for fiscal 2016 and fiscal 2017. The Company's calculation of this amount will change with further analysis and guidance from the U.S. federal and state tax authorities about the application of these new rules. The Company will continue to evaluate the impact of the tax law change as it relates to the accounting for the outside basis difference of its foreign entities. As a result of the reduction of the corporate income tax rate to 21.0%, U.S. GAAP requires companies to remeasure their deferred tax assets and liabilities as of the date of enactment, with resulting tax effects accounted for in the reporting period of enactment. The Company remeasured deferred tax assets and liabilities based on the rates at which they are expected to be utilized in the future. The provisional amount recorded for the remeasurement and resulting income tax benefit of the Company's deferred tax balance was $136.7 million. Due to the Act, the Company released its valuation allowance on foreign tax credits during the year ended March 31, 2018. The provisional amount recorded for the valuation allowance release was an income tax benefit of $36.4 million. The Company is still evaluating how the Act impacts the valuation allowance on state net operating loss carryforwards and state tax credits, and the Company may report an adjustment to the valuation allowances in accordance with SAB 118 in subsequent quarters. The provision for income taxes differs from the amount computed by applying the statutory federal tax rate to income before income taxes. The sources and tax effects of the differences in the total income tax provision are as follows (amounts in millions):
| Year Ended March 31,
| 2018 |  | 2017 |  | 2016
Computed expected income tax provision | $ | 232.6 |  |  | $ | 31.4 |  |  | $ | 98.4 |
Foreign income taxed at lower than the federal rate | (208.8 | ) |  | (105.0 | ) |  | (120.1 | )
Impact of the Act - one-time transition tax, net of foreign tax credits | 653.7 |  |  | — |  |  | — |
Impact of the Act - deferred tax effects, net of valuation allowance | (136.7 | ) |  | — |  |  | — |
Increases related to current and prior year tax positions | 32.0 |  |  | 53.7 |  |  | 14.5 |
Decreases related to prior year tax positions (1) | (11.3 | ) |  | (36.3 | ) |  | (12.1 | )
Share-based compensation | (27.2 | ) |  | (25.0 | ) |  | — |
Research and development tax credits - current year | (17.0 | ) |  | (12.8 | ) |  | (13.5 | )
Research and development tax credits - prior years | — |  |  | — |  |  | (2.5 | )
Intercompany prepaid tax asset amortization | 7.4 |  |  | 7.9 |  |  | (15.5 | )
Withholding taxes | 1.4 |  |  | 5.6 |  |  | 6.0 |
Foreign exchange | (20.5 | ) |  | (1.7 | ) |  | 5.6 |
Other | (3.2 | ) |  | (0.4 | ) |  | (0.9 | )
Change in valuation allowance | (20.5 | ) |  | 1.8 |  |  | (2.5 | )
Total income tax provision (benefit) | $ | 481.9 |  |  | $ | (80.8 | ) |  | $ | (42.6 | )
(1) The release of prior year tax positions during fiscal 2018 increased the basic and diluted net income per common share by $0.05. The release of prior year tax positions during fiscal 2017 increased the basic and diluted net income per common share by $0.17 and $0.15, respectively. The release of prior year tax positions during fiscal 2016 increased the basic and diluted net income per common share by $0.06. The foreign tax rate differential benefit primarily relates to the Company's operations in Thailand, Cayman and Ireland. The Company's Thailand manufacturing operations are currently subject to numerous tax holidays granted to the Company based on its investment in property, plant and equipment in Thailand. The Company's tax holiday periods in Thailand expire between 2022 and 2025, however, the Company actively seeks to obtain new tax holidays. The Company does not expect the future expiration of any of its tax holiday periods in Thailand to have a material impact on its effective tax rate. The aggregate dollar benefits derived from these tax holidays approximated $6.2 million, $13.2 million and $9.4 million in fiscal 2018, 2017 and 2016, respectively. The impact of the tax holidays during fiscal 2018 increased the basic and diluted net income per common share by $0.03 and $0.02, respectively. The impact of the tax holidays during fiscal 2017 increased the basic and diluted net income per common share by $0.06. The impact of the tax holidays during fiscal 2016 increased the basic and diluted net income per common share by $0.05 and $0.04, respectively. The tax effects of temporary differences that give rise to significant portions of the Company's deferred tax assets and deferred tax liabilities are as follows (amounts in millions):
| March 31,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Deferred income on shipments to distributors | $ | 39.1 |  |  | $ | 55.7 |
Inventory valuation | 10.7 |  |  | 14.6 |
Net operating loss carryforward | 101.1 |  |  | 91.6 |
Capital loss carryforward | 10.6 |  |  | 12.9 |
Share-based compensation | 31.4 |  |  | 42.5 |
Income tax credits | 178.4 |  |  | 243.0 |
Property, plant and equipment | 25.7 |  |  | 59.7 |
Accrued expenses and other | 91.2 |  |  | 110.4 |
Gross deferred tax assets | 488.2 |  |  | 630.4 |
Valuation allowances | (204.5 | ) |  | (210.1 | )
Deferred tax assets, net of valuation allowances | 283.7 |  |  | 420.3 |
Deferred tax liabilities: |  |  |  |  |
Convertible debt | (304.4 | ) |  | (606.7 | )
Intangible assets | (66.6 | ) |  | (147.5 | )
Other | (18.3 | ) |  | (6.3 | )
Deferred tax liabilities | (389.3 | ) |  | (760.5 | )
Net deferred tax liability | $ | (105.6 | ) |  | $ | (340.2 | )
Reported as: |  |  |
Non-current deferred tax assets | $ | 100.2 |  |  | $ | 68.9 |
Non-current deferred tax liability | (205.8 | ) |  | (409.1 | )
Net deferred tax liability | $ | (105.6 | ) |  | $ | (340.2 | )
In assessing whether it is more likely than not that deferred tax assets will be realized, the Company considers all available evidence, both positive and negative, including its recent cumulative earnings experience and expectations of future available taxable income of the appropriate character by taxing jurisdiction, tax attribute carryback and carryforward periods available to them for tax reporting purposes, and prudent and feasible tax planning strategies. The Company had federal, state and foreign NOL carryforwards with an estimated tax effect of $101.1 million available at March 31, 2018. The federal and state NOL carryforwards expire at various times between 2018 and 2037. The Company believes that it is more likely than not that the benefit from certain foreign and state NOL carryforwards will not be realized. In recognition of this risk, at March 31, 2018, the Company has provided a valuation allowance of $74.6 million. The Company also has state tax credits with an estimated tax effect of $96.3 million available at March 31, 2018. These state tax credits expire at various times between 2018 and 2037. The Company believes that it is more likely than not that the full benefit from these state tax credits will not be realized, and therefore has provided a valuation allowance of $96.3 million. The Company has capital loss carryforwards with an estimated tax effect of $10.6 million available at March 31, 2018. These capital loss carryforwards begin to expire in 2020. The Company believes that it is more likely than not that the full benefit from these capital losses will not be realized, and therefore has provided a valuation allowance of $10.4 million. The Company no longer maintains a U.S. foreign tax credit carryforward, alternative minimum tax credit carryforward, or credit for increasing research activities credit carryforwards, as all of these credits are expected to be utilized as a result of the one-time transition tax in the United States as of March 31, 2018. The Company had refundable foreign tax credits of $49.2 million available at March 31, 2018. In addition, the Company had $20.0 million of withholding tax credits that expire at various times between 2022 and 2024 in foreign jurisdictions. The Company believes it is more likely than not that the benefit from these credits will not be fully realized and has provided a valuation allowance of $20.0 million. During the year ended March 31, 2016, the H.R. 2029 "Protecting Americans from Tax Hikes Act of 2015" was signed into law which extended certain business tax provisions through December 31, 2019, including IRC section 954(c)(6) dealing with the application of Subpart F to certain inter-company payments among controlled foreign corporations. The expiration of section 954(c)(6) and the other expired provisions could have a material impact on the Company's consolidated results of operations subsequent to the year ended March 31, 2020. The Company recognizes interest and penalties related to unrecognized tax benefits through income tax expense. The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. The Company files U.S. federal, U.S. state, and foreign income tax returns. For U.S. federal, and in general for U.S. state tax returns, the fiscal 2005 and later tax years remain effectively open for examination by tax authorities. For foreign tax returns, the Company is generally no longer subject to income tax examinations for years prior to fiscal 2007. Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. Although the Company believes that it has appropriately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different than expectations. The Company will adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate, the closing of a statutory audit period or changes in applicable tax law. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences would impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to the reserves that are considered appropriate, as well as related net interest. The Company recognizes liabilities for anticipated tax audit issues in the U.S. and other domestic and international tax jurisdictions based on its estimate of whether, and the extent to which, additional tax payments are more likely than not. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax laws applied to the facts of each matter. The Company believes it maintains appropriate reserves to offset any potential income tax liabilities that may arise upon final resolution of matters for open tax years. If such reserve amounts ultimately prove to be unnecessary, the resulting reversal of such reserves could result in tax benefits being recorded in the period the reserves are no longer deemed necessary. If such amounts prove to be less than an ultimate assessment, a future charge to expense would be recorded in the period in which the assessment is determined. The following table summarizes the activity related to the Company's gross unrecognized tax benefits from April 1, 2015 to March 31, 2018 (amounts in millions):
| Year Ended March 31,
| 2018 |  | 2017 |  | 2016
Beginning balance | $ | 398.5 |  |  | $ | 220.7 |  |  | $ | 170.7 |
Increases related to acquisitions | — |  |  | 193.3 |  |  | 46.2 |
Decreases related to settlements with tax authorities | (0.1 | ) |  | (11.7 | ) |  | (8.0 | )
Decreases related to statute of limitation expirations | (10.9 | ) |  | (7.6 | ) |  | (4.6 | )
Increases related to current year tax positions | 30.3 |  |  | 26.3 |  |  | 16.4 |
Increases (decreases) related to prior year tax positions | 18.2 |  |  | (22.5 | ) |  | — |
Ending balance | $ | 436.0 |  |  | $ | 398.5 |  |  | $ | 220.7 |
As of March 31, 2018, the Company had accrued approximately $12.9 million related to the potential payment of interest on the Company's uncertain tax positions. As of March 31, 2017, the Company had accrued approximately $9.4 million related to the potential payment of interest on the Company's uncertain tax positions. Interest was included in the provision for income taxes. The Company has accrued for approximately $67.9 million and $66.1 million in penalties related to its uncertain tax positions related primarily to its international locations as of March 31, 2018 and March 31, 2017, respectively. Interest and penalties charged to operations during the years ended March 31, 2018, 2017 and 2016 related to the Company's uncertain tax positions were $5.4 million, $5.8 million and $1.7 million, respectively. The total amount of gross unrecognized tax benefits was $436.0 million and $398.5 million as of March 31, 2018 and 2017, respectively, and is estimated to impact the Company’s effective tax rate, if recognized. We estimate that our unrecognized tax benefits as of March 31, 2018 could possibly decrease by approximately $20.0 million in the next 12 months. Positions that may be resolved include various U.S. and non-U.S. matters.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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