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Income Taxes | 3 Months Ended
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Jun. 30, 2018
Income Taxes [Abstract] |
Income Taxes |
Note 8: | Income Taxes
The Company’s effective tax rate for the three months ended June 30, 2018 and 2017 was 18.2 percent and 13.4 percent, respectively. The effective tax rate for the first quarter of fiscal 2019 is higher than the first quarter of the prior year, primarily due to a $3.5 million benefit for a Hungarian development tax credit in the prior year, partially offset by the reversal of a valuation allowance on deferred tax assets in a foreign jurisdiction during the first quarter of fiscal 2019. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). Shortly after the Tax Act was enacted, the SEC issued accounting guidance which provides a one-year measurement period during which a company may complete its accounting for the impacts of the Tax Act. To the extent a company’s accounting for certain income tax effects of the Tax Act is incomplete, the company may determine a reasonable estimate for those effects and record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply the provisions of the tax laws that were in effect immediately prior to the Tax Act being enacted. During fiscal 2018, the Company recorded provisional discrete tax charges totaling $38.0 million related to the Tax Act. The Company adjusted its U.S. deferred tax assets by $19.0 million due to the reduction in the U.S. federal corporate tax rate. This net reduction in deferred tax assets also included the estimated impact on the Company’s net state deferred tax assets. In addition, the Company recorded a $19.0 million charge for the transition tax required under the Tax Act. The Company is in process of evaluating whether to utilize its deferred tax attributes against the transition tax. If the Company elects not to do so, it expects to pay the estimated $19.0 million transition tax liability over the next eight years, beginning with a payment of approximately $1.5 million during fiscal 2019. The Company is also awaiting additional technical guidance on the treatment of the transition tax and its impact on fiscal year taxpayers. In addition, the Company is analyzing the state tax impact of the transition tax and the associated impact on the realizability of tax attributes and the impact of the global intangible low taxed income (“GILTI”) provision of the Tax Act on its deferred tax attributes. The Company has elected to record the tax effects of the GILTI provision as a period expense in the applicable tax year. The Company has not yet completed its accounting for the income tax effects of certain elements of the Tax Act. In regard to the reduction in the U.S. corporate tax rate, the Company will continue to analyze the impacts of the Tax Act through the finalization of its fiscal 2018 U.S. federal tax return. In regard to the transition tax, the Company is awaiting further interpretative guidance, continuing to assess available tax methods and elections, and continuing to gather additional information in order to more precisely compute the amount of this tax. Previously, the Company’s practice and intention was to reinvest, with certain insignificant exceptions, the earnings of its non-U.S. subsidiaries outside of the U.S. As a result, the Company did not record U.S. deferred income taxes or foreign withholding taxes for these earnings. The Company is currently analyzing its global working capital requirements and the potential tax liabilities that would be incurred if its non-U.S. subsidiaries distribute cash to the U.S. parent, which include local country withholding taxes and potential U.S. state taxes. The Company expects to complete its analysis of the accounting guidance related to the Tax Act and its evaluation of the impacts of the Tax Act in the second or third quarter of fiscal 2019. The Company is continuing to analyze the provisions of the Tax Act to determine the impact on its fiscal 2019 effective tax rate. For the first quarter of fiscal 2019, the Company has recorded an estimate for GILTI, the base erosion anti-abuse tax provision of the Tax Act, new limits on the deductibility of executive compensation, and the state tax implications of these provisions. As of June 30, 2018, valuation allowances against deferred tax assets in certain foreign jurisdictions totaled $33.7 million and valuation allowances against certain U.S. deferred tax assets totaled $7.0 million, as it is more likely than not these assets will not be realized based upon historical financial results. During the first quarter of fiscal 2019, the Company recorded a benefit of $2.0 million related to the reversal of a valuation allowance for deferred tax assets in a foreign jurisdiction after determining it was more likely than not the deferred tax assets would be realized in the future. The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions until the need for a valuation allowance is eliminated. The need for a valuation allowance is eliminated when the Company determines it is more likely than not the deferred tax assets will be realized. Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with its estimated annual effective tax rate. Under this methodology, the Company applies its estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter. The Company records the tax impacts of certain significant, unusual or infrequently occurring items in the period in which they occur. The Company excluded the impact of its operations in certain foreign locations from the overall effective tax rate methodology and recorded them discretely based upon year-to-date results because the Company anticipates net operating losses for the full fiscal year in these jurisdictions. The Company estimates that reductions to unrecognized tax benefits for the remainder of fiscal 2019 will total $2.2 million due mainly to lapses in statutes of limitations, which, if recognized, would have a $1.6 million favorable impact on its effective tax rate.

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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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