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Income Taxes | 12 Months Ended
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Mar. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The income tax provision consists of the following (amounts in millions):
| Year Ended March 31,
| 2019 |  | 2018 |  | 2017
Pretax (loss) income: |  |  |  |  |
U.S. | $ | (593.4 | ) |  | $ | (127.3 | ) |  | $ | (279.3 | )
Foreign | 797.9 |  |  | 864.6 |  |  | 369.1 |
| $ | 204.5 |  |  | $ | 737.3 |  |  | $ | 89.8 |
Current (benefit) expense: |  |  |  |  |
U.S. Federal | $ | (98.0 | ) |  | $ | 369.4 |  |  | $ | 21.3 |
State | (5.3 | ) |  | 0.5 |  |  | 1.0 |
Foreign | 14.1 |  |  | 60.8 |  |  | 23.8 |
Total current (benefit) expense | $ | (89.2 | ) |  | $ | 430.7 |  |  | $ | 46.1 |
Deferred expense (benefit): |  |  |  |  |  |  |  |
U.S. Federal | $ | 11.9 |  |  | $ | 82.5 |  |  | $ | (114.7 | )
State | 0.6 |  |  | 0.1 |  |  | (5.4 | )
Foreign | (74.7 | ) |  | (31.4 | ) |  | (6.8 | )
Total deferred (benefit) expense | (62.2 | ) |  | 51.2 |  |  | (126.9 | )
Total Income tax (benefit) provision | $ | (151.4 | ) |  | $ | 481.9 |  |  | $ | (80.8 | )
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. 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 allowed 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 measurable and with the understanding that the provisional amount was 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. As of December 31, 2018, the Company completed its review of the previously recorded provisional amounts related to the Act, recorded necessary adjustments, and the amounts are now final under SAB 118. As of March 31, 2018, the Company remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21%), by recording a provisional income tax benefit of $136.7 million. Upon further analysis of certain aspects of the Act and refinement of its calculations during the period ended December 31, 2018, the Company did not make adjustments to the provisional amount. The one-time transition tax is based on the Company's total post-1986 earnings and profits (E&P), the tax on which the Company previously deferred from U.S. income taxes under U.S. law. The Company recorded a provisional amount for its one-time transition tax expense for each of its foreign subsidiaries, resulting in a transition tax expense of $644.7 million at March 31, 2018. Upon further analyses of the Act and notices and regulations issued and proposed by the U.S. Department of the Treasury and the Internal Revenue Service, the Company finalized its calculations of the transition tax expense during the period ended December 31, 2018. The Company increased its March 31, 2018 provisional amount by $13.1 million to $657.8 million, which is included as a component of income tax expense from continuing operations. The measurement period adjustment of $13.1 million decreased basic and diluted net income per common share by $0.06 and $0.05, respectively, for the year ended March 31, 2019. The Company intends to invest substantially all of its foreign subsidiary earnings, as well as its capital in its foreign subsidiaries, indefinitely outside of the U.S. in those jurisdictions in which the Company would incur significant, additional costs upon repatriation of such amounts. It is not practical to estimate the additional tax that would be incurred, if any, if the permanently reinvested earnings were repatriated. As of March 31, 2018, the Company removed its valuations allowance on certain foreign tax credits and recorded a provisional income tax benefit of $36.4 million. Upon further analysis of the Act, the Company did not make adjustments to the provisional amount. The Act subjects a U.S. shareholder to tax on Global Intangible Low-Taxed Income (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, 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 to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI in the year the tax is incurred. 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,
| 2019 |  | 2018 |  | 2017
Computed expected income tax provision | $ | 43.0 |  |  | $ | 232.6 |  |  | $ | 31.4 |
State income taxes, net of federal benefit | (8.7 | ) |  | (1.3 | ) |  | (4.6 | )
Foreign income taxed at lower than the federal rate | (94.0 | ) |  | (208.8 | ) |  | (105.0 | )
Impact of the Act - one-time transition tax, net of foreign tax credits | 13.1 |  |  | 653.7 |  |  | — |
Impact of the Act - deferred tax effects, net of valuation allowance | — |  |  | (136.7 | ) |  | — |
Global intangible low-taxed income | 95.4 |  |  | — |  |  | — |
Business realignment | (90.6 | ) |  | — |  |  | — |
Increases related to current year tax positions | 9.0 |  |  | 32.0 |  |  | 53.7 |
Decreases related to prior year tax positions (1) | (75.1 | ) |  | (11.3 | ) |  | (36.3 | )
Share-based compensation | (13.3 | ) |  | (27.2 | ) |  | (25.0 | )
Research and development tax credits | (27.5 | ) |  | (17.0 | ) |  | (12.8 | )
Intercompany prepaid tax asset amortization | 5.2 |  |  | 7.4 |  |  | 7.9 |
Foreign exchange | 4.6 |  |  | (20.5 | ) |  | (1.7 | )
Other | (2.6 | ) |  | (0.5 | ) |  | 9.8 |
Change in valuation allowance | (9.9 | ) |  | (20.5 | ) |  | 1.8 |
Total income tax provision (benefit) | $ | (151.4 | ) |  | $ | 481.9 |  |  | $ | (80.8 | )
(1) The release of prior year tax positions during fiscal 2019 increased the basic and diluted net income per common share by $0.32 and $0.30, respectively. 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 foreign tax rate differential benefit primarily relates to the Company's operations in Thailand, Malta 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 fiscal 2022 and 2026, 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 Company’s Microsemi operations in Malaysia are subject to a tax holiday that effectively reduces the income tax rate in that jurisdiction. Microsemi’s tax holiday in Malaysia was granted in 2009 and is effective through December 2019, subject to continued compliance with the tax holiday’s requirements. The aggregate dollar expense derived from these tax holidays approximated $0.1 million in fiscal 2019. The aggregate dollar benefit derived from these tax holidays approximated $6.2 million and $13.2 million in fiscal 2018 and 2017, respectively. The impact of the tax holidays during fiscal 2019 did not impact basic and diluted net income per common share. 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 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,
| 2019 |  | 2018
Deferred tax assets: |  |  |
Deferred income on shipments to distributors | $ | — |  |  | $ | 39.1 |
Inventory valuation | 45.0 |  |  | 10.7 |
Net operating loss carryforward | 94.3 |  |  | 101.1 |
Capital loss carryforward | 9.6 |  |  | 10.6 |
Share-based compensation | 42.4 |  |  | 31.4 |
Income tax credits | 376.5 |  |  | 178.4 |
Property, plant and equipment | 23.6 |  |  | 25.7 |
Accrued expenses and other | 91.4 |  |  | 91.2 |
Intangible assets | 1,608.1 |  |  | — |
Other | 12.6 |  |  | — |
Gross deferred tax assets | 2,303.5 |  |  | 488.2 |
Valuation allowances | (332.1 | ) |  | (204.5 | )
Deferred tax assets, net of valuation allowances | 1,971.4 |  |  | 283.7 |
Deferred tax liabilities: |  |  |  |  |
Convertible debt | (279.3 | ) |  | (304.4 | )
Intangible assets | (721.0 | ) |  | (66.6 | )
Other | — |  |  | (18.3 | )
Deferred tax liabilities | (1,000.3 | ) |  | (389.3 | )
Net deferred tax asset (liability) | $ | 971.1 |  |  | $ | (105.6 | )
Reported as: |  |  |
Non-current deferred tax assets | $ | 1,677.2 |  |  | $ | 100.2 |
Non-current deferred tax liability | (706.1 | ) |  | (205.8 | )
Net deferred tax asset (liability) | $ | 971.1 |  |  | $ | (105.6 | )
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 $94.3 million available at March 31, 2019. The federal, state and foreign NOL carryforwards expire at various times between 2020 and 2039, of which portion of the NOL carryforwards do not expire. The Company had state tax credits of $158.5 million available at March 31, 2019. These state tax credits expire at various times between 2020 and 2039. The Company had capital loss carryforwards with an estimated tax effect of $9.6 million available at March 31, 2019. These capital loss carryforwards begin to expire in fiscal 2020. The Company had foreign tax credits of $18.5 million available at March 31, 2019. These foreign tax credits begin to expire in fiscal 2022. The Company had credits for increasing research activity in the amount of $129.3 million available at March 31, 2019. These credits begin to expire in fiscal 2020. The Company had U.S. prior year minimum tax credits in the amount of $4.5 million available at March 31, 2019. These credits do not expire. The Company had refundable tax credits in foreign jurisdictions of $45.8 million available at March 31, 2019. The Company had withholding tax credits in foreign jurisdictions of $19.9 million available at March 31, 2019. These credits expire at various times between fiscal 2022 and 2024. 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 2007 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, the tax positions are more likely than not to be sustained based on the technical merits. 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, 2016 to March 31, 2019 (amounts in millions):
| Year Ended March 31,
| 2019 |  | 2018 |  | 2017
Beginning balance | $ | 436.0 |  |  | $ | 398.5 |  |  | $ | 220.7 |
Increases related to acquisitions | 329.7 |  |  | — |  |  | 193.3 |
Decreases related to settlements with tax authorities | (8.3 | ) |  | (0.1 | ) |  | (11.7 | )
Decreases related to statute of limitation expirations | (16.2 | ) |  | (10.9 | ) |  | (7.6 | )
Increases related to current year tax positions | 27.8 |  |  | 30.3 |  |  | 26.3 |
Increases (decreases) related to prior year tax positions | (5.6 | ) |  | 18.2 |  |  | (22.5 | )
Ending balance | $ | 763.4 |  |  | $ | 436.0 |  |  | $ | 398.5 |
As of March 31, 2019 and March 31, 2018, the Company had accrued interest and penalties related to tax contingencies of $88.1 million and $80.8 million, respectively. Interest and penalties charged to operations for the years ended March 31, 2018 and 2017 related to the Company's uncertain tax positions were $5.4 million and $5.8 million, respectively. Previously accrued interest and penalties that were released during the year ended March 31, 2019 were $37.5 million. The total amount of gross unrecognized tax benefits was $763.4 million and $436.0 million as of March 31, 2019 and March 31, 2018, respectively, of which $664.4 million and $436.0 million is estimated to impact the Company's effective tax rate, if recognized. The Company estimates that it is reasonably possible unrecognized tax benefits as of March 31, 2019 could decrease by approximately $50.0 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://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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