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Income Taxes | 12 Months Ended
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Mar. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes
|  | Fiscal year ended March 31,
|  | 2019 |  | 2018 |  | 2017
Current income tax expense |  |  |  |  |  |
Current: |  |  |  |  |  |
Federal |  | $ | 6,377 |  |  | $ | 115,315 |  |  | $ | 30,362 |
State |  | 5,027 |  |  | 3,461 |  |  | 4,855 |
Foreign |  | 16,636 |  |  | 20,030 |  |  | 17,800 |
Total current income tax expense |  | 28,040 |  |  | 138,806 |  |  | 53,017 |
Deferred income tax (benefit) expense |  |  |  |  |  |
Federal |  | (5,031 | ) |  | (9,551 | ) |  | 857 |
State |  | (669 | ) |  | 789 |  |  | 590 |
Foreign |  | (756 | ) |  | (11,551 | ) |  | 8 |
Total deferred income tax (benefit) expense |  | (6,456 | ) |  | (20,313 | ) |  | 1,455 |
Total income tax expense |  | $ | 21,584 |  |  | $ | 118,493 |  |  | $ | 54,472 |
Earnings before income taxes consists of the following:
|  | Fiscal year ended March 31,
|  | 2019 |  | 2018 |  | 2017
United States |  | $ | 53,339 |  |  | $ | 74,440 |  |  | $ | 80,436 |
Foreign |  | 128,872 |  |  | 163,886 |  |  | 132,259 |
Earnings before income taxes |  | $ | 182,211 |  |  | $ | 238,326 |  |  | $ | 212,695 |
Income taxes paid by the Company for the fiscal years ended March 31, 2019, 2018 and 2017 were $53,866, $28,044 and $45,332, respectively. U.S. Tax Cuts and Jobs Act of 2017 On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. Among the significant changes resulting from the law, the Tax Act reduced the U.S. federal income tax rate from 35% to 21% effective January 1, 2018, and required companies to pay a one-time transition tax on unrepatriated cumulative non-U.S. earnings of foreign subsidiaries and created new taxes on certain foreign sourced earnings. The U.S. federal statutory tax rate for fiscal 2019 is 21.0%. On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) that provided guidance on the financial statement implications of the Tax Act. In fiscal 2018, the Company recorded a provisional amount for the Transition Tax liability, resulting in an increase in income tax expense of $97,500. In fiscal 2019, the Company completed its accounting for the tax effects of enactment of the Tax Act. The Company recognized an income tax benefit of $13,483, net of uncertain tax positions, resulting from a decrease in the mandatory one-time transition tax on unrepatriated cumulative non-U.S. earnings of the Company's foreign businesses. The Company made the election on the 2017 Federal Income Tax Return to pay the one-time Tax Act liability over an eight-year period without interest, as allowed under the tax enactment. In fiscal 2019, the global intangible low-taxed income (“GILTI”), foreign derived intangible income (“FDII”), and base-erosion and anti-abuse (“BEAT”) provisions became effective. The GILTI provisions require the Company to include in its US income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. Under US GAAP, the Company is allowed to make an accounting policy choice of either (1) treating the taxes due on future US inclusions in taxable income as a current-period expense when incurred (“period cost method”) or (2) factoring amounts into a Company’s measurement of its deferred taxes (“deferred method”). The Company has elected the period cost method. Based on existing legislative guidance and interpretation, the Company's effective tax rate has increased by approximately 2.2% compared to prior year. FDII allows a new deduction for U.S. corporations up to 37.5% of foreign derived intangible income. This is an export incentive that reduces the tax on foreign derived sales and service income. Based upon the existing legislative guidance and interpretation, the Company's effective tax rate has decreased by 0.9% compared to prior year. The BEAT provisions eliminate the deductions of certain base-erosion payments to related foreign corporations and impose a minimum tax if greater than regular tax. The Company does not expect to be subject to BEAT for fiscal 2019. The following table sets forth the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities:
|  | March 31,
|  | 2019 |  | 2018
Deferred tax assets: |  |  |  |
Accounts receivable |  | $ | 1,297 |  |  | $ | 1,790 |
Inventories |  | 4,081 |  |  | 3,660 |
Net operating loss carryforwards |  | 48,423 |  |  | 50,928 |
Accrued expenses |  | 21,574 |  |  | 21,274 |
Capitalized research and development costs |  | 7,061 |  |  | — |
Other assets |  | 17,656 |  |  | 16,832 |
Gross deferred tax assets |  | 100,092 |  |  | 94,484 |
Less valuation allowance |  | (17,519 | ) |  | (15,255 | )
Total deferred tax assets |  | 82,573 |  |  | 79,229 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment |  | 25,656 |  |  | 21,045 |
Intangible assets |  | 96,826 |  |  | 46,058 |
Other liabilities |  | 1,737 |  |  | 1,331 |
Total deferred tax liabilities |  | 124,219 |  |  | 68,434 |
Net deferred tax (liabilities) assets |  | $ | (41,646 | ) |  | $ | 10,795 |
The Company has approximately $1,438 in United States federal net operating loss carryforwards, all of which are limited by Section 382 of the Internal Revenue Code, with expirations between 2023 and 2027. The Company has approximately $168,906 of foreign net operating loss carryforwards, of which $102,792 may be carried forward indefinitely and $66,114 expire between fiscal 2020 and fiscal 2034. In addition, the Company also has approximately $33,900 of state net operating loss carryforwards with expirations between fiscal 2020 and fiscal 2039. As of March 31, 2019 and 2018, the federal valuation allowance was $1,027 and $630, respectively. Of the net increase of $397, $1,027 is due to the current year acquisition of Alpha, offset by $630 due to the expiration of capital losses for which a full valuation allowance was previously recorded. As of March 31, 2019 and 2018, the valuation allowance associated with the state tax jurisdictions was $898 and $895, respectively. As of March 31, 2019 and 2018, the valuation allowance associated with certain foreign tax jurisdictions was $15,594 and $13,730, respectively. Of the net increase of $1,864, $2,876 was recorded as an increase to tax expense primarily related to net operating loss carryforwards generated in the current year that the Company believes are not more likely than not to be realized. The remaining net decrease of $1,012 is primarily related to foreign currency translation adjustments and an offset to adjustments to foreign net operating losses for which a full valuation allowance was recorded. A reconciliation of income taxes at the statutory rate (21.0% for fiscal 2019, 31.55% for fiscal 2018 and 35% for fiscal 2017) to the income tax provision is as follows:
|  | Fiscal year ended March 31,
|  | 2019 |  | 2018 |  | 2017
United States statutory income tax expense |  | $ | 38,264 |  |  | $ | 75,196 |  |  | $ | 74,444 |
Increase (decrease) resulting from: |  |  |  |  |  |
Impact of Tax Act |  | (13,483 | ) |  | 83,400 |  |  | — |
State income taxes, net of federal effect |  | 3,285 |  |  | 3,146 |  |  | 3,677 |
Nondeductible expenses, domestic manufacturing deduction (fiscal 2018 and 2017) and other |  | 2,677 |  |  | 1,078 |  |  | 1,993 |
Legal proceedings charge - European Competition Investigations - See Note 18 |  | 2,405 |  |  | — |  |  | 7,873 |
Net effect of GILTI, FDII, BEAT |  | 2,320 |  |  | — |  |  | — |
Goodwill impairment - See Note 5 |  | — |  |  | — |  |  | 3,812 |
Effect of foreign operations |  | (16,763 | ) |  | (35,048 | ) |  | (39,377 | )
Valuation allowance |  | 2,879 |  |  | (9,279 | ) |  | 2,050 |
Income tax expense |  | $ | 21,584 |  |  | $ | 118,493 |  |  | $ | 54,472 |
The effective income tax rates for the fiscal years ended March 31, 2019, 2018 and 2017 were 11.9%, 49.7% and 25.6%, respectively. The effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions in which the Company operates and the amount of its consolidated income before taxes. The rate decrease in fiscal 2019 compared to fiscal 2018 is primarily due to the impact of the Tax Act, partially offset by increases for additional tax valuation allowances related to certain of our foreign subsidiaries, increases due to non-deductible legal proceedings charge related to the European competition investigation, and changes in the mix of earnings among tax jurisdictions in fiscal 2019. The rate increase in fiscal 2018 compared to fiscal 2017 is also primarily due to the Tax Act. In fiscal 2019, the foreign effective income tax rate on foreign pre-tax income of $128,872 was 12.3%. In fiscal 2018, the foreign effective income tax rate on foreign pre-tax income of $163,886 was 5.2% and in fiscal 2017, the foreign effective income tax rate on foreign pre-tax income of $132,259 was 13.5%. The rate increase in fiscal 2019 compared to fiscal 2018 is primarily due to additional tax valuation allowances related to certain of the Company’s foreign subsidiaries, increases due to non-deductible legal proceedings charge related to the European competition investigation, and changes in the mix of earnings among tax jurisdictions in fiscal 2019. The rate decrease in fiscal 2018 compared to fiscal 2017 is primarily due to the reversal of previously recognized deferred tax valuation allowances related to certain of the Company’s foreign subsidiaries in fiscal 2018, decreases due to non-deductible goodwill impairment charges and non-deductible legal proceedings charge related to the European competition investigation in fiscal 2017, and changes in the mix of earnings among tax jurisdictions. Income from the Company's Swiss subsidiary comprised a substantial portion of its overall foreign mix of income for the fiscal years ended March 31, 2019, 2018 and 2017 and was taxed at approximately 4%, 8% and 5%, respectively. The Company has approximately $1,167,000 and $1,260,000 of undistributed earnings of foreign subsidiaries for fiscal years 2019 and 2018, respectively. Since the Company’s undistributed foreign earnings and outside basis differences inherent in foreign entities continue to be indefinitely reinvested in foreign operations, no additional income taxes have been provided. Uncertain Tax Positions The following table summarizes activity of the total amounts of unrecognized tax benefits:
|  | Fiscal year ended March 31,
|  | 2019 |  | 2018 |  | 2017
Balance at beginning of year |  | $ | 1,568 |  |  | $ | 1,450 |  |  | $ | 2,375 |
Increases related to current year tax positions |  | 129 |  |  | 397 |  |  | 252 |
Increases related to the Alpha acquisition |  | 7,840 |  |  | — |  |  | — |
Increases related to prior year tax positions |  | 11,463 |  |  | 11 |  |  | 31 |
Decreases related to prior tax positions and foreign currency translation |  | (544 | ) |  | — |  |  | (352 | )
Decreases related to prior year tax positions settled |  | (93 | ) |  | (1 | ) |  | (678 | )
Lapse of statute of limitations |  | (198 | ) |  | (289 | ) |  | (178 | )
Balance at end of year |  | $ | 20,165 |  |  | $ | 1,568 |  |  | $ | 1,450 |
The increase of prior year tax positions during fiscal 2019, are related to items included in the Tax Act. In connection with the Alpha acquisition, the Company recorded an unrecognized tax benefit of $7,840, as well as an indemnification asset of $7,840 representing the Seller's obligation to indemnify the Company for the outcome of potential contingent liabilities relating to uncertain tax positions. See Note 2 for more information relating to the acquisition. All of the balance of unrecognized tax benefits at March 31, 2019, if recognized, would be included in the Company’s Consolidated Statements of Income and have a favorable impact on both the Company’s net earnings and effective tax rate. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2008. While the net effect on total unrecognized tax benefits cannot be reasonably estimated, approximately $2,275 is expected to reverse in fiscal 2020 due to expiration of various statute of limitations. The Company recognizes tax related interest and penalties in income tax expense in its Consolidated Statements of Income. As of March 31, 2019 and 2018, the Company had an accrual of $75 and $116, respectively, for interest and penalties.

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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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