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Income Taxes | 12 Months Ended
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Mar. 31, 2019
Income Taxes [Abstract] |
Income Taxes |
Note 8: | Income Taxes
The U.S. and foreign components of earnings before income taxes and the benefit or provision for income taxes consisted of the following:
|  | Years ended March 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Components of earnings (loss) before income taxes: |  |  |  |  |  |  |  |  |
United States |  | $ | 22.4 |  |  | $ | 2.5 |  |  | $ | (8.6 | )
Foreign |  |  | 58.4 |  |  |  | 60.8 |  |  |  | 29.4 |
Total earnings before income taxes |  | $ | 80.8 |  |  | $ | 63.3 |  |  | $ | 20.8 |
Income tax (benefit) provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | (20.4 | ) |  | $ | 11.6 |  |  | $ | 0.1 |
Deferred |  |  | (4.2 | ) |  |  | 23.3 |  |  |  | (3.8 | )
State: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 0.7 |  |  |  | (0.3 | ) |  |  | 0.3 |
Deferred |  |  | 1.9 |  |  |  | 2.0 |  |  |  | (0.2 | )
Foreign: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 19.0 |  |  |  | 16.1 |  |  |  | 10.1 |
Deferred |  |  | (2.1 | ) |  |  | (13.2 | ) |  |  | (0.6 | )
Total income tax (benefit) provision |  | $ | (5.1 | ) |  | $ | 39.5 |  |  | $ | 5.9 |
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. Shortly after the Tax Act was enacted, the SEC issued accounting guidance which provided a one-year measurement period during which a company could 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 was incomplete, the company could determine a reasonable estimate for those effects and record a provisional estimate in its financial statements. If a company could not determine a provisional estimate to be included in the financial statements, it was to continue applying 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. During fiscal 2019, the Company completed its accounting for the Tax Act, which resulted in an income tax benefit totaling $7.7 million. The Company determined it will utilize its deferred tax attributes against the transition tax and finalized its fiscal 2018 U.S. federal income tax return. As a result, the Company decreased the provisional charge recorded for the reduction in the U.S. federal corporate tax rate by $9.3 million, since more deferred tax assets were utilized to offset taxable income at a higher fiscal 2018 U.S. federal corporate tax rate. The Company also decreased the transition tax liability to $18.9 million, a reduction of $0.1 million. In addition, the Company recorded a charge of $1.7 million for a reduction to state deferred tax assets. The Tax Act included a new provision designed to tax global intangible low taxed income (“GILTI”) starting in fiscal 2019. The Company elected to record the tax effects of the GILTI provision as a period expense in the applicable tax year. The Company’s accounting policy is to allocate the income tax provision between net earnings and other comprehensive income. The Company applies its accounting for income taxes by tax jurisdiction, and in periods in which there is a loss before income taxes and pre-tax income in other comprehensive income, it first allocates the income tax provision to other comprehensive income, and then records a related tax benefit in the income tax provision. The reconciliation between the U.S. federal statutory rate and the Company’s effective tax rate was as follows:
|  | Years ended March 31, |
|  | 2019 |  |  | 2018 |  |  | 2017 |
Statutory federal tax |  |  | 21.0 | % |  |  | 31.5 | % |  |  | 35.0 | %
State taxes, net of federal benefit |  |  | 3.6 |  |  |  | 2.9 |  |  |  | (3.3 | )
Taxes on non-U.S. earnings and losses |  |  | 3.9 |  |  |  | (3.8 | ) |  |  | (3.5 | )
Valuation allowances |  |  | 4.0 |  |  |  | (5.6 | ) |  |  | 1.2 |
Tax credits |  |  | (26.1 | ) |  |  | (17.3 | ) |  |  | (9.0 | )
Compensation |  |  | (0.1 | ) |  |  | (0.8 | ) |  |  | 2.9 |
Tax rate or law changes |  |  | (12.0 | ) |  |  | 60.1 |  |  |  | (2.5 | )
Uncertain tax positions, net of settlements |  |  | 0.4 |  |  |  | (0.8 | ) |  |  | 5.6 |
Notional interest deductions |  |  | (2.5 | ) |  |  | (3.2 | ) |  |  | (8.8 | )
Dividend repatriation |  |  | 1.6 |  |  |  | 0.2 |  |  |  | 7.1 |
Other |  |  | (0.1 | ) |  |  | (0.8 | ) |  |  | 3.7 |
Effective tax rate |  |  | (6.3 | %) |  |  | 62.4 | % |  |  | 28.4 | %
During fiscal 2019, the Company recorded income tax benefits totaling $7.7 million related to the Tax Act, as discussed above; recorded income tax benefits totaling $14.5 million as a result of amending previous-year tax returns to recognize foreign tax credits that are expected to be realized based upon future sources of income; and recorded a $2.5 million income tax benefit related to a manufacturing deduction in the United States. Also in fiscal 2019, the Company changed its determination of whether it was more likely than not certain deferred tax assets of two separate subsidiaries in a foreign jurisdiction would be realized and, as a result, adjusted the respective valuation allowances and recorded an income tax benefit totaling $1.0 million. In addition, the Company recorded a net increase of deferred tax asset valuation allowances totaling $4.3 million related to other tax jurisdictions and recorded a $2.2 million income tax benefit associated with the reduction in unrecognized tax benefits resulting from a lapse in statutes of limitations. During fiscal 2018, the Company recorded provisional charges totaling $38.0 million related to the Tax Act, as discussed above, and recognized a $9.0 million Hungarian development tax credit. Also in fiscal 2018, the Company reversed a portion of the valuation allowance on certain deferred tax assets in a foreign jurisdiction after determining it was more likely than not these assets would be realized, and, as a result, recorded an income tax benefit of $2.8 million. In addition, the Company recorded a $1.8 million income tax benefit in fiscal 2018 associated with the reduction in unrecognized tax benefits resulting from a lapse in statutes of limitations. During fiscal 2017, the Company recorded a valuation allowance of $2.0 million on certain deferred tax assets in a foreign jurisdiction after determining it was more likely than not the deferred tax assets would not be realized. Also during fiscal 2017, the Company recorded a net reduction of deferred tax asset valuation allowances totaling $1.8 million in other tax jurisdictions. The Company will continue to provide valuation allowances against its net deferred tax assets in each applicable tax jurisdiction 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. The tax effects of temporary differences that gave rise to deferred tax assets and liabilities were as follows:
|  | March 31, |
|  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |
Accounts receivable |  | $ | 0.2 |  |  | $ | 0.3 |
Inventories |  |  | 3.4 |  |  |  | 4.1 |
Plant and equipment |  |  | 1.8 |  |  |  | 2.3 |
Pension and employee benefits |  |  | 32.7 |  |  |  | 36.0 |
Net operating and capital losses |  |  | 73.5 |  |  |  | 102.5 |
Credit carryforwards |  |  | 60.3 |  |  |  | 36.7 |
Other, principally accrued liabilities |  |  | 10.0 |  |  |  | 9.9 |
Total gross deferred tax assets |  |  | 181.9 |  |  |  | 191.8 |
Less: valuation allowances |  |  | (43.4 | ) |  |  | (48.9 | )
Net deferred tax assets |  |  | 138.5 |  |  |  | 142.9 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Plant and equipment |  |  | 15.1 |  |  |  | 17.6 |
Goodwill |  |  | 4.8 |  |  |  | 5.2 |
Intangible assets |  |  | 28.8 |  |  |  | 32.4 |
Other |  |  | 0.9 |  |  |  | 0.7 |
Total gross deferred tax liabilities |  |  | 49.6 |  |  |  | 55.9 |
Net deferred tax assets |  | $ | 88.9 |  |  | $ | 87.0 |
Unrecognized tax benefits were as follows:
|  | Years ended March 31, |
|  | 2019 |  |  | 2018 |
Beginning balance |  | $ | 13.6 |  |  | $ | 14.2 |
Gross increases - tax positions in prior period |  |  | 1.6 |  |  |  | 0.8 |
Gross decreases - tax positions in prior period (a) |  |  | (0.2 | ) |  |  | (1.2 | )
Gross increases - due to acquisition |  |  | - |  |  |  | 1.4 |
Gross increases - tax positions in current period |  |  | 1.1 |  |  |  | 0.5 |
Settlements |  |  | (0.1 | ) |  |  | (0.3 | )
Lapse of statute of limitations |  |  | (2.2 | ) |  |  | (1.8 | )
Ending balance |  | $ | 13.8 |  |  | $ | 13.6 |
| (a) | Fiscal 2018 includes $1.0 million related to the reduction of the U.S. federal corporate tax rate as a result of the Tax Act.
The Company’s liability for unrecognized tax benefits as of March 31, 2019 was $13.8 million, and if recognized, $12.2 million would have an effective tax rate impact. The Company estimates a $0.2 million decrease in unrecognized tax benefits during fiscal 2020 due to lapses in statutes of limitations and settlements. If recognized, these reductions would not have a significant impact on the Company’s effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. During fiscal 2019 and 2018, interest and penalties included within income tax expense in the consolidated statements of operations were not significant. At March 31, 2019 and 2018, accrued interest and penalties totaled $1.1 million and $1.0 million, respectively. The Company files income tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. At March 31, 2019, the Company was under income tax examination in a number of jurisdictions. The following tax years remain subject to examination for the Company’s major tax jurisdictions:
Germany | Fiscal 2011 - Fiscal 2018
Italy | Calendar 2014 - Fiscal 2018
United States | Fiscal 2016 - Fiscal 2018
At March 31, 2019, the Company had federal and state tax credits of $60.0 million that, if not utilized against U.S. taxes, will expire between fiscal 2020 and 2039. The Company also had state and local tax loss carryforwards totaling $129.5 million that, if not utilized against state apportioned taxable income, will expire between fiscal 2020 and 2039. In addition, the Company had tax loss and foreign attribute carryforwards totaling $351.6 million in various tax jurisdictions throughout the world. Certain of the carryforwards in the U.S. and in foreign jurisdictions are offset by valuation allowances. If not utilized against taxable income, $9.7 million of these carryforwards will expire between fiscal 2020 and 2034, and $341.9 million, mainly related to Germany and Italy, will not expire due to an unlimited carryforward period. The Company’s practice and intention is to reinvest, with certain insignificant exceptions, the earnings of its non-U.S. subsidiaries outside of the U.S., and therefore, the Company has not recorded foreign withholding taxes or deferred income taxes for these earnings. The Company has estimated the net amount of unrecognized foreign withholding tax and deferred tax liabilities would total approximately $7.0 million if the accumulated foreign earnings were distributed; however, the actual tax cost would be dependent on circumstances existing when remittance occurs.

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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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