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Income Taxes | 12 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Changes in Tax Law On December 22, 2017, H.R.1, also known as the Tax Cuts and Jobs Act (Tax Reform Act) was enacted into law. The Tax Reform Act includes significant changes to US corporate income tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, the transition of the US tax regime from a worldwide tax system to a territorial tax system, and provisions aimed at preventing base erosion of the US tax base. Further, on December 22, 2017, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 118 (SAB 118) which provides guidance on accounting for the impact of the Tax Reform Act. SAB 118 provides a measurement period, which should not extend beyond one year from the enactment date, during which the Company may complete the accounting for the impacts of the Tax Reform Act under ASC Topic 740. In accordance with SAB 118, the Company must reflect the income tax effects of the Tax Reform Act in the reporting period in which the accounting under ASC 740 is complete. Provisional Estimates. To the extent accounting for certain income tax effects of the Tax Reform Act is incomplete, the Company can determine a reasonable estimate for those effects and record a provisional estimate in the consolidated financial statements in the first reporting period in which a reasonable estimate can be made. If the Company cannot determine a provisional estimate to be included in the consolidated financial statements, the Company can continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the Tax Reform Act being enacted. If the Company is unable to provide a reasonable estimate of certain impacts of the Tax Reform Act in a reporting period, provisional amounts must be reported in the first reporting period in which a reasonable estimate can be determined. During the year ended March 31, 2018, the Company recorded the following provisional estimates for the income tax expense impacts from the Tax Reform Act in the consolidated statements of comprehensive income (loss):
• | $57,138 related to the US federal income tax associated with the one-time mandatory deemed repatriation of accumulated foreign earnings, including discrete tax impacts of $44,871 related to foreign earnings and profits generated prior to April 1, 2017, of which $4,571 is payable within 12 months and recorded in current income taxes payable in the consolidated balance sheets.
• | Non-cash income tax expense of approximately $14,395 to re-measure its deferred tax assets and liabilities to the income tax rates applicable for future periods in which they are expected to reverse.
• | State income tax of $1,976 associated with one-time mandatory deemed repatriation of accumulated foreign earnings, of which $607 relates to the state income tax liability recorded for the $250,000 cash distribution remitted from a foreign subsidiary during the quarter ended March 31, 2018, and $927 relates to the deferred state income tax liability on unremitted foreign earnings and profits.
During the quarter ended March 31, 2018, the Company recorded the following adjustments to amounts recorded as prior period provisional estimates for the income tax expense impacts of the Tax Reform Act in the consolidated statements of comprehensive income (loss):
• | An overall reduction of $3,887 related to the US federal income tax associated with the one-time mandatory deemed repatriation of accumulated foreign earnings. This adjustment includes a reduction in the discrete tax impacts of $7,570 offset by an increase in the current year tax expense of $3,683 driven by corrections to earnings and profits reported for years prior to April 1, 2017.
• | An increase of $973 to non-cash income tax expense to re-measure its deferred tax assets and liabilities related to the income tax rates applicable for future periods in which they are expected to reverse. This adjustment was driven by the effects of phased-in US federal tax rate reductions from 35% to 31.5% to 21% on scheduling the reversal of temporary differences.
• | An increase of $1,558 to state income tax associated with the one-time mandatory deemed repatriation of accumulated foreign earnings. This adjustment was driven by the Company's ongoing analysis of the state income tax impacts resulting from the Tax Reform Act.
In accordance with SAB 118, the provisional estimates recorded represent reasonable estimates of the effects of the Tax Reform Act for which the analysis is not yet complete. As the Company completes its analysis of the effects of the Tax Reform Act, including collecting, preparing and analyzing necessary information regarding foreign earnings and profits, performing and refining calculations and obtaining additional guidance from such standard setting and regulatory bodies as the US Internal Revenue Service, US Treasury Department and FASB, among others, it may record adjustments to the provisional estimates. The Company expects to finalize its provisional estimates at the earlier of the time it files its US federal income tax return for the year ended March 31, 2018 or the end of the measurement period provided for under SAB 118, which is December 31, 2018. The Tax Reform Act includes other provisions with effective dates for the Company beginning January 1, 2018 and beyond. The Company continues to account for other changes that impact business related income, exclusions, deductions and credits that cannot yet be quantified based on existing accounting guidance and the provisions of the tax laws in effect immediately prior to the enactment of the Tax Reform Act. The Company continues to analyze the provisions of the Tax Reform Act to fully assess the anticipated impact on its consolidated financial statements. Income Tax Expense (Benefit) Components of income tax expense (benefit) are as follows:
| Years Ended March 31,
| 2018 |  | 2017 |  | 2016
Current |  |  |  |  |
Federal | $ | 80,339 |  |  | $ | 2,184 |  |  | $ | 11,971 |
State | 3,437 |  |  | 1,576 |  |  | 2,443 |
Foreign | 14,388 |  |  | 8,039 |  |  | 12,039 |
Total | 98,164 |  |  | 11,799 |  |  | 26,453 |
Deferred |  |  |  |  |
Federal | 12,007 |  |  | (20,287 | ) |  | 7,887 |
State | 391 |  |  | (3,446 | ) |  | 1,113 |
Foreign | (4,260 | ) |  | (762 | ) |  | (833 | )
Total | 8,138 |  |  | (24,495 | ) |  | 8,167 |
Income tax expense (benefit) | $ | 106,302 |  |  | $ | (12,696 | ) |  | $ | 34,620 |
Foreign income before income taxes was $149,214, $63,011, and $105,938 during the years ended March 31, 2018, 2017, and 2016, respectively. Income Tax Expense (Benefit) Reconciliation Income tax expense (benefit) differed from that obtained by applying the statutory federal income tax rate to income before income taxes or benefit as follows:
| Years Ended March 31,
| 2018 |  | 2017 |  | 2016
Computed expected income taxes | $ | 69,556 |  |  | $ | (2,445 | ) |  | $ | 54,910 |
State income taxes, net of federal income tax benefit | 9,044 |  |  | (1,403 | ) |  | 1,298 |
Foreign rate differential | (37,090 | ) |  | (8,062 | ) |  | (28,233 | )
Unrecognized tax benefits | 1,301 |  |  | 2,691 |  |  | 3,670 |
Income tax expense on diminution of operations and nondeductible goodwill | — |  |  | 3,921 |  |  | 1,352 |
Foreign income withholding tax expense | 262 |  |  | 432 |  |  | — |
Nontaxable income | (7,006 | ) |  | (5,055 | ) |  | — |
US tax on deemed repatriated foreign earnings | 57,138 |  |  | — |  |  | — |
Re-measurement of deferred taxes | 14,395 |  |  | — |  |  | — |
Statutory foreign income tax expense (benefit) | 59 |  |  | (2,504 | ) |  | (477 | )
Other | (1,357 | ) |  | (271 | ) |  | 2,100 |
Income tax expense (benefit) | $ | 106,302 |  |  | $ | (12,696 | ) |  | $ | 34,620 |
Deferred Taxes The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are as follows:
| As of March 31,
| 2018 |  | 2017
Deferred tax assets (liabilities), noncurrent: |  |  |
Amortization and impairment of intangible assets | $ | 18,261 |  |  | $ | 28,304 |
Depreciation of property and equipment | (9,638 | ) |  | (19,511 | )
Stock-based compensation | 4,027 |  |  | 6,258 |
Deferred rent | 5,452 |  |  | 6,809 |
Acquisition costs | 481 |  |  | 751 |
Uniform capitalization adjustment to inventory | 3,212 |  |  | 4,971 |
Bad debt allowance and other reserves | 12,939 |  |  | 15,946 |
State taxes | 798 |  |  | (145 | )
Prepaid expenses | (2,686 | ) |  | (4,144 | )
Accrued bonuses | 7,573 |  |  | 1,456 |
Foreign currency exchange rate hedges | (80 | ) |  | (534 | )
Other | (2,821 | ) |  | 1,376 |
Net operating loss carry-forwards | 863 |  |  | 3,171 |
Deferred tax assets, net | $ | 38,381 |  |  | $ | 44,708 |
In order to fully realize the deferred tax assets, the Company will need to generate future taxable income of approximately $118,118. The deferred tax assets are primarily related to the Company's domestic operations and are currently expected to be realized between fiscal years 2019 and 2030. The Company recorded various adjustments to non-current deferred tax assets during the year ended March 31, 2018 related to the adoption of new ASUs, as well as $253 attributable to the effective portion of Designated Derivative Contracts recognized in OCI. Refer to the section entitled "Recent Accounting Pronouncements" in Note 1, "General," for more information regarding the adjustments to non-current deferred tax assets as a result of the adoption of ASU Nos. 2016-09 and 2018-02. Domestic income (loss) before income taxes for the years ended March 31, 2018, 2017, and 2016, was $321,482, $(56,305), and $50,947, respectively, inclusive of intercompany dividends of $250,000, $13,692, and $0, respectively, Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets and, accordingly, no valuation allowance was recorded in fiscal years 2018 and 2017. Tax Impact of Foreign Earnings Pursuant to the Tax Reform Act, the Company recorded approximately $59,114 of US federal and state income taxes on approximately $627,787 of undistributed earnings from its non-US subsidiaries through December 31, 2017. During the quarter ended March 31, 2018, a cash distribution of $250,000 was remitted from a foreign subsidiary and the Company recorded a state income tax provision of $607. No foreign withholding taxes were required. The total income tax expense recorded also includes a deferred state liability of $927 for all undistributed earnings through December 31, 2017. As of March 31, 2018, the Company reported approximately $385,884 of undistributed earnings from its non-US subsidiaries, of which $203,032 relates to cash and cash equivalents that could be subject to foreign withholding taxes if repatriated. During the fourth quarter ended March 31, 2018, the Company earned approximately $15,389 from its non-US subsidiaries that is not subject to the one-time mandatory deemed repatriation tax and for which no taxes have been provided. The Company anticipates making future cash distributions only from undistributed earnings that have been or will be subject to US tax. Any remaining earnings balance that has not already been subject to US income tax is expected to be reinvested outside of the US indefinitely as it is required to fund ongoing foreign operations. Due to the complexities in the laws of foreign jurisdictions and assumptions that would have to be made, it is not practicable to estimate the amount of foreign withholding taxes associated with such unremitted earnings. Unrecognized Tax Benefits When tax returns are filed, some positions taken are subject to uncertainty about the merits of the position taken or the amount that would be ultimately sustained upon examination. The benefit of a tax position is recognized in the consolidated financial statements in the period during which the Company believes it is more likely than not that the position will be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely to be realized upon settlement. The portion of the benefit that exceeds the amount measured, as described above, is recorded as a liability for unrecognized tax benefits in the consolidated balance sheets, along with any associated interest and penalties that would be payable to the taxing authorities upon examination. A reconciliation of the beginning and ending amounts of total gross unrecognized tax benefits is as follows:
Balance, March 31, 2016 | $ | 8,695 |
Gross increase related to current year tax positions | 1,878 |
Gross increase related to prior year tax positions | 1,154 |
Balance, March 31, 2017 | 11,727 |
Gross increase related to current year tax positions | 1,168 |
Gross increase related to prior year tax positions | 1,243 |
Settlements | (4,501 | )
Lapse of statute of limitations | (43 | )
Balance, March 31, 2018 | $ | 9,594 |
As of March 31, 2018, the Company had accrued $9,594 of gross unrecognized tax benefits recorded in long-term income tax liability in the consolidated balance sheets resulting from tax positions that are subject to examination. As of March 31, 2018, the Company accrued interest and potential penalties of $3,224 compared to $2,990 as of March 31, 2017 in the consolidated balance sheets and recorded these amounts in interest expense in the Company's consolidated statements of comprehensive income (loss). As of March 31, 2018, the Company had $1,301 of net unrecognized tax benefits affecting the Company's effective tax rate and $369 of interest and penalties expenses recorded in interest expense the consolidated statements of comprehensive income (loss). In the next 12 months the Company does not believe it is reasonably possible it will settle any unrecognized tax benefits. The Company has on-going income tax examinations in various state and foreign tax jurisdictions and regularly assesses tax positions taken in years open to examination. The Company files income tax returns in the US federal jurisdictions and various state, local, and foreign jurisdictions. With few exceptions, the Company is no longer subject to US federal, state, local, or non-US income tax examinations by tax authorities for the fiscal years before 2013. Although the Company believes its tax estimates are reasonable and prepares its tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company's estimates or from its historical income tax provisions and accruals. The results of an audit or litigation could have a material impact on operating results or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, or interest assessments. However, it is the opinion of management that the Company does not currently expect these audits and inquiries to have a material impact on the Company's consolidated financial statements.

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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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