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Income Taxes | 12 Months Ended
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Mar. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes
|  | Fiscal year ended March 31,
|  | 2021 |  | 2020 |  | 2019
Current income tax expense |  |  |  |  |  |
Current: |  |  |  |  |  |
Federal |  | $ | 12,591 |  |  | $ | 9,185 |  |  | $ | 6,377 |
State |  | 4,133 |  |  | 2,561 |  |  | 5,027 |
Foreign |  | 19,031 |  |  | 14,561 |  |  | 16,636 |
Total current income tax expense |  | 35,755 |  |  | 26,307 |  |  | 28,040 |
Deferred income tax (benefit) expense |  |  |  |  |  |
Federal |  | 1,495 |  |  | 5,489 |  |  | (5,031) |
State |  | 735 |  |  | 741 |  |  | (669) |
Foreign |  | (11,224) |  |  | (22,716) |  |  | (756) |
Total deferred income tax (benefit) expense |  | (8,994) |  |  | (16,486) |  |  | (6,456) |
Total income tax expense |  | $ | 26,761 |  |  | $ | 9,821 |  |  | $ | 21,584 |
Earnings before income taxes consists of the following:
|  | Fiscal year ended March 31,
|  | 2021 |  | 2020 |  | 2019
United States |  | $ | 56,055 |  |  | $ | 36,193 |  |  | $ | 53,339 |
Foreign |  | 114,080 |  |  | 110,744 |  |  | 128,872 |
Earnings before income taxes |  | $ | 170,135 |  |  | $ | 146,937 |  |  | $ | 182,211 |
Income taxes paid by the Company for the fiscal years ended March 31, 2021, 2020 and 2019 were $32,002, $48,653 and $53,866, respectively. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law in the U.S. to provide certain relief as a result of the COVID-19 pandemic. In addition, governments around the world have enacted or implemented various forms of tax relief measures in response to the economic conditions in the wake of COVID-19. As of March 31, 2021, neither the CARES Act nor changes to income tax laws or regulations in other jurisdictions had a significant impact on the Company’s effective tax rate. 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,
|  | 2021 |  | 2020
Deferred tax assets: |  |  |  |
Accounts receivable |  | $ | 2,029 |  |  | $ | 1,110 |
Inventories |  | 8,831 |  |  | 5,010 |
Net operating loss carryforwards |  | 62,663 |  |  | 44,340 |
Lease liabilities |  | 15,685 |  |  | 18,168 |
Accrued expenses |  | 36,775 |  |  | 26,113 |
Other assets |  | 18,173 |  |  | 19,793 |
Gross deferred tax assets |  | 144,156 |  |  | 114,534 |
Less valuation allowance |  | (31,928) |  |  | (20,951) |
Total deferred tax assets |  | 112,228 |  |  | 93,583 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment |  | 38,364 |  |  | 30,229 |
Lease Right-of-use assets |  | 15,685 |  |  | 18,168 |
Intangible assets |  | 66,743 |  |  | 66,529 |
Other liabilities |  | 2,636 |  |  | 1,217 |
Total deferred tax liabilities |  | 123,428 |  |  | 116,143 |
Net deferred tax liabilities |  | $ | (11,200) |  |  | $ | (22,560) |
The Company has approximately $1,078 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 $235,225 of foreign net operating loss carryforwards, of which $186,816 may be carried forward indefinitely and $48,409 expire between fiscal 2022 and fiscal 2041. In addition, the Company also has approximately $28,955 of state net operating loss carryforwards with expirations between fiscal 2022 and fiscal 2041. The following table sets forth the changes in the Company's valuation allowance for fiscal 2021, 2020 and 2019:
|  | Balance at Beginning of Period |  | Additions Charged to Expense |  | Valuation Allowance Reversal |  | Business Combination Adjustments |  | Other(1) |  | Balance at End of Period
Fiscal year ended March 31, 2019 |  | $ | 15,255 |  |  | $ | 2,978 |  |  | $ | (99) |  |  | $ | 1,157 |  |  | $ | (1,772) |  |  | $ | 17,519 |
Fiscal year ended March 31, 2020 |  | 17,519 |  |  | 7,494 |  |  | (3,145) |  |  | (688) |  |  | (229) |  |  | 20,951 |
Fiscal year ended March 31, 2021 |  | 20,951 |  |  | 8,437 |  |  | (2,904) |  |  | 6,384 |  |  | (940) |  |  | 31,928 |
(1)Includes the impact of currency changes and the expiration of net operating losses for which a full valuation allowance was recorded. As of March 31, 2021 and 2020, the Company had no federal valuation allowance and the valuation allowance associated with the state tax jurisdictions was $686 and $896, respectively. As of March 31, 2021 and 2020, the valuation allowance associated with certain foreign tax jurisdictions was $31,242 and $20,055, respectively. Of the net increase of $11,187, $5,743 was recorded as an increase to tax expense primarily related to deferred tax assets generated in the current year that the Company believes are not more likely than not to be realized. Of the remaining increase, $6,384 is related to purchase accounting from the prior year acquisition offset by $(940) primarily related to foreign currency translation adjustments and 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 2021, 2020 and 2019) to the income tax provision is as follows:
|  | Fiscal year ended March 31,
|  | 2021 |  | 2020 |  | 2019
United States statutory income tax expense |  | $ | 35,729 |  |  | $ | 30,857 |  |  | $ | 38,264 |
Increase (decrease) resulting from: |  |  |  |  |  |
Impact of Tax Act |  | — |  |  | — |  |  | (13,483) |
State income taxes, net of federal effect |  | 4,000 |  |  | 2,764 |  |  | 3,285 |
Nondeductible expenses and other |  | 5,273 |  |  | 5,953 |  |  | 4,378 |
Legal proceedings charge - European Competition Investigations |  | — |  |  | — |  |  | 2,405 |
Net effect of GILTI, FDII, BEAT |  | 1,985 |  |  | 3,025 |  |  | 2,320 |
Goodwill impairment - See Note 7 |  | — |  |  | 10,714 |  |  | — |
Effect of foreign operations |  | (20,035) |  |  | (17,605) |  |  | (16,763) |
Valuation allowance |  | 5,533 |  |  | 4,349 |  |  | 2,879 |
Switzerland Tax Reform |  | (1,883) |  |  | (26,846) |  |  | — |
Research and Development Credit |  | (3,841) |  |  | (3,390) |  |  | (1,701) |
Income tax expense |  | $ | 26,761 |  |  | $ | 9,821 |  |  | $ | 21,584 |
The effective income tax rates for the fiscal years ended March 31, 2021, 2020 and 2019 were 15.7%, 6.7% and 11.9%, 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 increase in fiscal 2021 compared to fiscal 2020 is primarily due to Swiss tax reform, partially offset by the Hagen, Germany exit charges and changes in the mix of earnings among tax jurisdictions. The rate decrease in fiscal 2020 compared to fiscal 2019 is primarily due to changes in mix of earnings among tax jurisdictions, Swiss tax reform, and items related to the Tax Act in fiscal 2019. On May 19, 2019, a public referendum held in Switzerland approved the Federal Act on Tax Reform and AHV (Old-Age and Survivors Insurance) Financing (TRAF) as adopted by the Swiss Federal Parliament on September 28, 2018. The Swiss tax reform measures were effective January 1, 2020. The Company recorded a net deferred tax asset of $22,500 during fiscal 2020, related to the amortizable goodwill and based on further evaluation with the Swiss tax authority, recorded an additional income tax benefit of $1,883 during fiscal 2021. In fiscal 2021, the foreign effective income tax rate on foreign pre-tax income of $114,080 was 6.8%. In fiscal 2020, the foreign effective income tax rate on foreign pre-tax income of $110,744 was (7.4)% and in fiscal 2019, the foreign effective income tax rate on foreign pre-tax income of $128,872 was 12.3%. The rate increase in fiscal 2021 compared to fiscal 2020 is primarily due to Swiss tax reform, partially offset by the Hagen, Germany exit charges and changes in the mix of earnings among tax jurisdictions. The rate decrease in fiscal 2020 compared to fiscal 2019 is primarily due to Swiss tax reform 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, 2021, 2020 and 2019 and was taxed, excluding the impact from the Swiss tax reform, at approximately 8%, 3% and 4%, respectively. The Company has approximately $1,591,000 and $1,376,000 of undistributed earnings of foreign subsidiaries for fiscal years 2021 and 2020, respectively. During fiscal 2021, previously undistributed earnings of certain foreign subsidiaries were no longer considered indefinitely reinvested. As a result, no additional income taxes have been provided as the Company had previously recognized a one-time transition tax on these earnings under the Tax Act. The Company intends to continue to be indefinitely reinvested on the remaining undistributed foreign earnings and outside basis differences and therefore, 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,
|  | 2021 |  | 2020 |  | 2019
Balance at beginning of year |  | $ | 7,795 |  |  | $ | 20,165 |  |  | $ | 1,568 |
Increases related to current year tax positions |  | 346 |  |  | 598 |  |  | 129 |
Increases related to the Alpha acquisition |  | — |  |  | 769 |  |  | 7,840 |
Increases related to prior year tax positions |  | 325 |  |  | — |  |  | 11,463 |
Decreases related to prior tax positions |  | — |  |  | (11,463) |  |  | (544) |
Decreases related to prior year tax positions settled |  | — |  |  | — |  |  | (93) |
Lapse of statute of limitations |  | (1,681) |  |  | (2,274) |  |  | (198) |
Balance at end of year |  | $ | 6,785 |  |  | $ | 7,795 |  |  | $ | 20,165 |
All of the balance of unrecognized tax benefits at March 31, 2021, 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 2010. While the net effect on total unrecognized tax benefits cannot be reasonably estimated, approximately $1,850 is expected to reverse in fiscal 2022 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, 2021 and 2020, the Company had an accrual of $400 and $285, 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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