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Income Taxes | 12 Months Ended
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Mar. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income Before Income Taxes. Components of income before income taxes recorded in the consolidated statements of comprehensive income, were as follows:
| Years Ended March 31,
| 2020 |  | 2019 |  | 2018
Domestic* | $ | 206,111 |  |  | $ | 181,730 |  |  | $ | 71,482 |
Foreign | 134,755 |  |  | 147,204 |  |  | 149,214 |
Total | $ | 340,866 |  |  | $ | 328,934 |  |  | $ | 220,696 |
*Domestic income before income taxes for the years ended March 31, 2020, 2019, and 2018 is presented net of intercompany dividends of $150,000, $130,000, and $250,000, respectively. Income Tax Expense. Components of income tax expense (benefit) recorded in the consolidated statements of comprehensive income, were as follows:
| Years Ended March 31,
| 2020 |  | 2019 |  | 2018
Current |  |  |  |  |
Federal | $ | 47,087 |  |  | $ | 33,334 |  |  | $ | 80,339 |
State | 635 |  |  | 9,084 |  |  | 3,437 |
Foreign | 14,068 |  |  | 15,269 |  |  | 14,388 |
Total | 61,790 |  |  | 57,687 |  |  | 98,164 |
Deferred |  |  |  |  |
Federal | 4,626 |  |  | 6,612 |  |  | 12,007 |
State | (462 | ) |  | 2,236 |  |  | 391 |
Foreign | (1,230 | ) |  | (1,909 | ) |  | (4,260 | )
Total | 2,934 |  |  | 6,939 |  |  | 8,138 |
Total | $ | 64,724 |  |  | $ | 64,626 |  |  | $ | 106,302 |
Income Tax Expense Reconciliation. Income tax expense (benefit) differed from that obtained by applying the statutory federal income tax rate to income before income taxes, as follows:
| Years Ended March 31,
| 2020 |  | 2019 |  | 2018
Computed expected income taxes | $ | 71,582 |  |  | $ | 69,076 |  |  | $ | 69,556 |
State income taxes, net of federal income tax benefit* | 11,042 |  |  | 9,329 |  |  | 9,044 |
Foreign rate differential | (17,966 | ) |  | (20,105 | ) |  | (37,090 | )
Unrecognized tax benefits | 6,695 |  |  | 786 |  |  | 1,301 |
Return to provision adjustments | (1,682 | ) |  | (179 | ) |  | (2,252 | )
Nontaxable income | (4,584 | ) |  | (4,257 | ) |  | (7,006 | )
Nondeductible expense | 4,162 |  |  | 7,742 |  |  | 1,382 |
US tax on foreign earnings** | 2,343 |  |  | 5,848 |  |  | 57,138 |
Re-measurement of deferred taxes*** | — |  |  | (983 | ) |  | 14,395 |
Tax audit settlements | (3,956 | ) |  | — |  |  | — |
Statutory foreign income tax (benefit) expense | (906 | ) |  | 276 |  |  | 59 |
Other | (2,006 | ) |  | (2,907 | ) |  | (225 | )
Total | $ | 64,724 |  |  | $ | 64,626 |  |  | $ | 106,302 |
*During the year ended March 31, 2018, the Company recorded $1,976 of state income taxes associated with one-time mandatory deemed repatriation of foreign earnings due to the Tax Cuts and Jobs Act (Tax Reform Act) in December 2017. **The amount for the year ended March 31, 2018 is the one-time mandatory deemed repatriation tax on accumulated foreign earnings due pursuant to the Tax Reform Act. The amounts for the years ended March 31, 2020 and 2019 are global intangible low-taxed income (commonly referred to as GILTI) under the territorial tax system pursuant to the Tax Reform Act. ***The total non-cash re-measurement of deferred tax assets and liabilities for the year ended March 31, 2018 was driven by the US federal tax rate reduction from 35.0% to 21.0% pursuant to the Tax Reform Act. Due to the enactment of Tax Reform Act, the Company is subject to US taxation of its foreign subsidiary earnings considered global intangible low-taxed income, as well as limitations on the deductibility of executive compensation, which are included in income tax expense in the consolidated statements of comprehensive income for the periods presented above. In accordance with the SEC Staff Accounting Bulletin No. 118 (SAB 118), issued December 22, 2017, the Company completed its accounting for the material effects of the Tax Reform Act during the quarter ended December 31, 2018. In connection with finalizing the tax effects of the Tax Reform Act, the Company recorded immaterial measurement period adjustments during the year ended March 31, 2019 including a reduction from $59,114 to $57,895 related to the one-time mandatory deemed repatriation tax on accumulated foreign earnings. Refer to section below entitled “US Taxation of Foreign Earnings” for further information. The Company continues to evaluate new guidance and legislation as it is issued. In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27th, 2020. The Company reviewed the provisions of the CARES Act and consider the effect to be immaterial. 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,
| 2020 |  | 2019
Deferred tax assets |  |  |
Amortization and impairment of intangible assets | $ | 11,471 |  |  | $ | 13,615 |
Nonvested stock-based compensation | 5,194 |  |  | 3,645 |
Deferred rent obligations* | — |  |  | 4,899 |
Operating lease liability* | 45,600 |  |  | — |
Uniform capitalization adjustment to inventory | 4,322 |  |  | 3,965 |
Bad debt allowance and other reserves | 14,243 |  |  | 11,932 |
Accrued bonuses | 6,187 |  |  | 7,350 |
Foreign currency translation | 645 |  |  | 670 |
Net operating loss carry-forwards, net of valuation allowances | 2,071 |  |  | 1,002 |
Other | 1,372 |  |  | 1,445 |
Gross deferred tax assets | 91,105 |  |  | 48,523 |
Valuation allowances | (1,519 | ) |  | (195 | )
Total | 89,586 |  |  | 48,328 |
Deferred tax liabilities |  |  |
Prepaid expenses | (4,252 | ) |  | (3,379 | )
Operating lease asset* | (41,276 | ) |  | — |
Depreciation of property and equipment | (15,825 | ) |  | (14,079 | )
Total | (61,353 | ) |  | (17,458 | )
Deferred tax assets, net | $ | 28,233 |  |  | $ | 30,870 |
*Adoption of the new lease standard as of April 1, 2019, as described in Note 1, “General,” under the section “Recent Accounting Pronouncements”, resulted in the recognition of a deferred tax asset for operating lease liabilities and a deferred tax liability for operating lease assets. These temporary differences will reverse over the estimated term of the relevant operating leases. As of March 31, 2019, the deferred tax assets associated with operating leases were reported as deferred rent obligations under legacy US GAAP. In order to fully realize the deferred tax assets, the Company will need to generate future taxable income of $104,483. The deferred tax assets are primarily related to the Company’s domestic operations and are currently expected to be realized between fiscal years 2021 and 2031. The Company recorded a net increase of $297 to deferred tax assets, net during the year ended March 31, 2020 related to the adoption of new ASUs and the tax effect of changes in cumulative translation adjustments. Based on 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. The Company’s deferred tax valuation allowances are primarily the result of foreign losses in jurisdictions with limited future profitability. As of March 31, 2020 and 2019, the Company reported tax credit carry-forwards available to reduce future taxable income of $410 and $36, respectively. Some of the net operating losses with full valuation allowances will expire beginning in 2022; however, other net operating losses and tax credits can be carried forward indefinitely. US Taxation of Foreign Earnings. Pursuant to the Tax Reform Act, the Company reported $57,895 of US federal and state income taxes on undistributed earnings from its non-US subsidiaries on its March 31, 2018 income tax returns filed with the US tax authorities. During the year ended March 31, 2019, the Company recorded $6,348 of US federal and state income tax expense, net of foreign tax credits on foreign earnings. As of March 31, 2020, the Company reported $363,140 of undistributed earnings from its non-US subsidiaries, of which $177,229 relates to cash and cash equivalents, a portion of which may be subject to additional foreign withholding taxes if it were to be repatriated. As of March 31, 2020, the Company reported $8,620 of accumulated earnings from its non-US subsidiaries for which no US federal or state income taxes have been provided. The Company currently anticipates repatriating current and future unremitted earnings of non-US subsidiaries, to the extent they have been and will be subject to US income tax, as long as such cash is not 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. During the year ended March 31, 2020, the Company declared a dividend of $150,000 from a foreign subsidiary, for which no foreign withholding taxes were required. 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 recorded 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. The recognition threshold is 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, along with any associated interest and penalties, in the consolidated balance sheets. A reconciliation of the beginning and ending amounts of total gross unrecognized tax benefits, are as follows:
Balance, March 31, 2017 | $ | 11,727 |
Gross increase related to current fiscal year tax positions | 1,168 |
Gross increase related to prior fiscal year tax positions | 1,243 |
Settlements | (4,501 | )
Lapse of statute of limitations | (43 | )
Balance, March 31, 2018 | 9,594 |
Gross increase related to current fiscal year tax positions | 1,027 |
Gross increase related to prior fiscal year tax positions | 3,282 |
Settlements | (1,157 | )
Lapse of statute of limitations | (1,804 | )
Balance, March 31, 2019 | 10,942 |
Gross increase related to current fiscal year tax positions | 1,153 |
Gross increase related to prior fiscal year tax positions | 8,152 |
Settlements | (246 | )
Lapse of statute of limitations | (2,363 | )
Balance, March 31, 2020 | $ | 17,638 |
Total gross unrecognized tax benefits recorded in the consolidated balance sheets, are as follows:
| As of March 31,
| 2020 |  | 2019
Long-term asset |  |  |
Deferred tax assets, net | $ | 486 |  |  | $ | 486 |
Current liability |  |  |
Income taxes payable | — |  |  | 7 |
Long-term liability |  |  |
Income tax liability | 17,152 |  |  | 10,449 |
Total | $ | 17,638 |  |  | $ | 10,942 |
As of March 31, 2020 and 2019, the Company had $3,631 and $2,456 accrued for the payment of interest and penalties, respectively, in income tax liability in the consolidated balance sheets. During the years ended March 31, 2020, 2019, and 2018, the Company recorded $1,176, $(110), and $369, respectively, of interest and penalties as an increase or (decrease) to interest expense in the consolidated statements of comprehensive income. Management believes it is reasonably possible that the amount of unrecognized tax benefits, as well as associated interest and penalties, may decrease during the next 12 months by $788 related primarily to the expiration of statute of limitations, partially offset by additional unrecognized tax benefits relating to current fiscal year tax return positions. Of this amount, $563 would result in an income tax benefit for the Company and $937 would result in a decrease to interest expense in the consolidated statements of comprehensive income. Gross unrecognized tax benefits of $17,638, $10,942, and $9,594 for the years ended March 31, 2020, 2019, and 2018, respectively, would reduce the annual effective tax rate, offset by an immaterial amount of deferred tax assets recognized for uncertain tax positions, recorded in the consolidated statements of comprehensive income. 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 jurisdiction and various state, local, and foreign jurisdictions. With few exceptions, the Company is no longer subject to US federal, state, local, or foreign income tax examinations by tax authorities before fiscal year 2016. 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 results of operations 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://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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