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Income Taxes | 12 Months Ended
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Mar. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The Company operates in the United States and many foreign countries and is subject to the tax laws of many jurisdictions. Changes in tax laws or the interpretation of tax laws can affect the Company’s earnings, as can the resolution of pending and contested tax issues. The Company's consolidated effective income tax rate is affected by a number of factors, including the mix of domestic and foreign earnings and the effect of exchange rate changes on local taxable income and deferred taxes in foreign countries. For fiscal years ended March 31, 2021, 2020, and 2019 the Company's U.S. federal statutory tax rate is 21.0%. The U.S. tax system is primarily territorial based after the enactment of the Tax Cuts and Jobs Act of 2017. The U.S. tax law imposes a tax on U.S. shareholders on certain low-taxed income earned by controlled foreign corporations, referred to as global intangible low-taxed income ("GILTI”). The Company has made an accounting policy election to account for any additional tax resulting from the GILTI provisions in the year in which it is incurred and has not recorded any deferred taxes on temporary book-tax differences related to this income. The Company continues to assume repatriation of all undistributed earnings of its consolidated foreign subsidiaries and has therefore provided for expected foreign withholding taxes on the distribution of those earnings where applicable, net of any U.S. tax credit attributable to those withholding taxes. The Company has asserted permanent reinvestment of the book basis of certain foreign subsidiaries, and accordingly, no deferred income tax liability has been recorded for any potential taxable gain that may be realized on a future disposition or liquidation of any of those subsidiaries. It is not practicable for the Company to quantify any deferred income tax liability that would be attributable to those events. Income Tax Expense Income taxes for the fiscal years ended March 31, 2021, 2020, and 2019 consisted of the following:
| Fiscal Year Ended March 31,
| 2021 |  | 2020 |  | 2019
Current |  |  |  |  |
United States | $ | 9,500 |  |  | $ | 2,001 |  |  | $ | (2,639) |
State and local | 621 |  |  | 92 |  |  | 377 |
Foreign | 21,626 |  |  | 41,892 |  |  | 39,578 |
| 31,747 |  |  | 43,985 |  |  | 37,316 |
Deferred |  |  |  |  |
United States | (5,938) |  |  | 3,735 |  |  | 5,713 |
State and local | (314) |  |  | (16) |  |  | (4) |
Foreign | 3,917 |  |  | (12,416) |  |  | (1,837) |
| (2,335) |  |  | (8,697) |  |  | 3,872 |
Total | $ | 29,412 |  |  | $ | 35,288 |  |  | $ | 41,188 |
Foreign taxes include any applicable U.S. tax expense on the earnings of foreign subsidiaries. Consolidated Effective Income Tax Rate A reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows:
| Fiscal Year Ended March 31,
| 2021 |  | 2020 |  | 2019
U.S. federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit | 0.2 |  |  | 0.1 |  |  | 0.2 |
Foreign earnings taxed at rates other than the U.S. federal statutory tax rate | (0.9) |  |  | (2.0) |  |  | 7.1 |
Foreign dividend withholding taxes | 5.3 |  |  | 5.1 |  |  | 3.7 |
Reversal of dividend withholding tax due to foreign subsidiary tax holiday | — |  |  | — |  |  | (5.1) |
Changes in uncertain tax positions | — |  |  | 5.6 |  |  | 1.4 |
Other | (2.2) |  |  | 1.3 |  |  | (1.1) |
Effective income tax rate | 23.4 | % |  | 31.1 | % |  | 27.2 | %
Final United States GILTI regulations published in July 2020 significantly changed from the proposed regulations published in 2019. The final regulations allow for an annual election for GILTI high-tax exclusion instead of a 5-year election and permitted retroactive application to years beginning after December 31, 2017. Universal elected to apply the final regulations to fiscal years 2019 and 2020 which resulted in a tax reduction of $2.7 million. In fiscal year 2021, the Company also recognized a $4.4 million net tax benefit for final U.S. tax regulations issued for hybrid dividends paid by foreign subsidiaries. During fiscal year 2020, the Company resolved a transfer pricing matter related to a foreign subsidiary. The resolution of the uncertainty with the local country taxing authorities resulted in net additional current income tax expense of $2.8 million. The additional income tax expense for fiscal year 2020 increased the effective tax rate for the year by 2.4% During fiscal year 2019, the Company reversed amounts previously recorded for dividend withholding taxes on distributed and undistributed retained earnings of a foreign subsidiary. The reversal followed the resolution of uncertainties with the local country taxing authorities with respect to the inclusion of the tax under a tax holiday applicable to the subsidiary and was attributable to cumulative retained earnings amounts previously distributed or expected to be distributed prior to the expiration of the tax holiday. The reversal reduced income tax expense for fiscal year 2019 by approximately $7.8 million, which decreased the effective tax rate for the year by 5.1%, as noted in the above rate reconciliation. Components of Income Before Income Taxes The U.S. and foreign components of income before income taxes were as follows:
| Fiscal Year Ended March 31,
| 2021 |  | 2020 |  | 2019
United States | $ | 30,060 |  |  | $ | 22,916 |  |  | $ | 37,478 |
Foreign | 95,666 |  |  | 90,375 |  |  | 113,844 |
Total | $ | 125,726 |  |  | $ | 113,291 |  |  | $ | 151,322 |
Deferred Income Tax Liabilities and Assets Significant components of deferred tax liabilities and assets were as follows:
| March 31,
| 2021 |  | 2020
Liabilities |  |  |
Foreign withholding taxes | $ | 21,711 |  |  | $ | 19,870 |
Property, plant and equipment | 8,726 |  |  | 10,078 |
Undistributed earnings | 2,947 |  |  | 7,298 |
Operating lease right-of-use assets | 6,856 |  |  | 9,877 |
Goodwill and other intangible assets | 35,059 |  |  | 23,435 |
All other | 4,876 |  |  | 4,813 |
Total deferred tax liabilities | $ | 80,175 |  |  | $ | 75,371 |
Assets |  |  |
Employee benefit plans | $ | 17,199 |  |  | $ | 22,773 |
Reserves and accruals | 7,603 |  |  | 7,708 |
Deferred income | 3,521 |  |  | 4,833 |
Operating lease right-of-use liabilities | 6,718 |  |  | 9,650 |
Currency translation losses of foreign subsidiaries | 2,173 |  |  | 2,173 |
Local currency exchange losses of foreign subsidiaries | 450 |  |  | 8,360 |
Interest rate swap | 5,178 |  |  | 7,284 |
All other | 8,568 |  |  | 7,464 |
Total deferred tax assets | 51,410 |  |  | 70,245 |
Valuation allowance | (4,080) |  |  | (3,394) |
Net deferred tax assets | $ | 47,330 |  |  | $ | 66,851 |
At March 31, 2021, the Company had no material net operating loss carryforwards in either its domestic or foreign operations. Combined Income Tax Expense (Benefit) The combined income tax expense (benefit) allocable to continuing operations and other comprehensive income was as follows:
| Fiscal Year Ended March 31,
| 2021 |  | 2020 |  | 2019
Continuing operations | $ | 29,412 |  |  | $ | 35,288 |  |  | $ | 41,188 |
Other comprehensive loss | (9,563) |  |  | (14,392) |  |  | (5,390) |
Total | $ | 19,849 |  |  | $ | 20,896 |  |  | $ | 35,798 |
Uncertain Tax Positions A reconciliation of the beginning and ending balance of the gross liability for uncertain tax positions is as follows:
| Fiscal Year Ended March 31,
| 2021 |  | 2020 |  | 2019
Liability for uncertain tax positions, beginning of year | $ | 2,377 |  |  | $ | 5,625 |  |  | $ | 3,673 |
Additions: |  |  |  |  |
Related to tax positions for the current year | 49 |  |  | 1,746 |  |  | 85 |
Related to tax positions for prior years | — |  |  | 4,369 |  |  | 2,169 |
Reductions: |  |  |  |  |
Due to lapses of statutes of limitations | (135) |  |  | (81) |  |  | (90) |
Due to tax settlements | — |  |  | (8,948) |  |  | — |
Effect of currency rate changes | 146 |  |  | (334) |  |  | (212) |
Liability for uncertain tax positions, end of year | $ | 2,437 |  |  | $ | 2,377 |  |  | $ | 5,625 |
Of the total liability for uncertain tax positions at March 31, 2021, approximately $2.4 million could have an effect on the consolidated effective tax rate if the tax benefits are recognized. The liability for uncertain tax positions includes $0.1 million related to tax positions for which it is reasonably possible that the amounts could change significantly before March 31, 2022. This amount reflects a possible decrease in the liability for uncertain tax positions that could result from the completion and resolution of tax audits and the expiration of open tax years in various tax jurisdictions. During fiscal year 2020, the Company resolved a transfer pricing matter related to a foreign subsidiary. The settlement in fiscal year 2020 represents the resolution of a tax matter with a local country taxing authority that resulted in a $8.9 million settlement of which $4.5 million was accrued in prior fiscal years. For the fiscal year ended March 31, 2021, the Company recognized $1.8 million as a component of interest expense related to a settlement of an uncertain tax position at a foreign subsidiary. Amounts accrued or reversed for interest were not material for fiscal years 2020 or 2019. Amounts accrued or reversed for penalties were not material for fiscal years 2019 through 2021, and liabilities recorded for interest and penalties at March 31, 2021 and 2020 also were not material. Universal and its subsidiaries file a U.S. federal consolidated income tax return, as well as returns in several U.S. states and a number of foreign jurisdictions. As of March 31, 2021, the Company's earliest open tax year for U.S. federal income tax purposes was its fiscal year ended March 31, 2017. Open tax years in U.S. federal, state and foreign jurisdictions range from 3 to 6 years.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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