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Income Taxes | 12 Months Ended
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Mar. 31, 2022
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, 2023, 2022, and 2021 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, 2023, 2022, and 2021 consisted of the following:
| Fiscal Year Ended March 31,
| 2023 |  | 2022 |  | 2021
Current |  |  |  |  |
United States | $ | 9,967 |  |  | $ | 15,042 |  |  | $ | 9,500 |
State and local | 1,134 |  |  | 265 |  |  | 621 |
Foreign | 8,289 |  |  | 25,828 |  |  | 21,626 |
| 19,390 |  |  | 41,135 |  |  | 31,747 |
Deferred |  |  |  |  |
United States | (4,727) |  |  | (498) |  |  | (5,938) |
State and local | 613 |  |  | 1,568 |  |  | (314) |
Foreign | (3,543) |  |  | (3,542) |  |  | 3,917 |
| (7,657) |  |  | (2,472) |  |  | (2,335) |
Total | $ | 11,733 |  |  | $ | 38,663 |  |  | $ | 29,412 |
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,
| 2023 |  | 2022 |  | 2021
U.S. federal statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit | 1.0 |  |  | 1.0 |  |  | 0.2 |
Foreign earnings taxed at rates other than the U.S. federal statutory tax rate | (1.5) |  |  | 3.7 |  |  | (0.9) |
Foreign dividend withholding taxes | 2.6 |  |  | 2.3 |  |  | 5.3 |
Brazil tax ruling | (17.1) |  |  | — |  |  | — |
Changes in uncertain tax positions | (0.1) |  |  | (0.3) |  |  | — |
Other | 2.4 |  |  | (0.5) |  |  | (2.2) |
Effective income tax rate | 8.3 | % |  | 27.2 | % |  | 23.4 | %
In fiscal year 2023, one of the Company's subsidiaries in Brazil received a favorable final judgement from the Brazilian Superior Court of Justice. The lawsuit asserted certain tax credits on exported goods should be excluded from taxable income. The Brazilian revenue authority asserted certain tax credits generated on purchased goods and services that were ultimately exported from Brazil should be included in the calculation of taxable income. The Brazilian Superior Court of Justice affirmed the tax credits are non-taxable in accordance with the historical and existing tax legislation in Brazil. The ruling resulted in recognition of $26.6 million of Brazilian tax credits due to the recalculation of federal income taxes in Brazil for years 2015 through 2022. The affirmative ruling also resulted in recognition of $5.0 million of interest income for the fiscal year ended March 31, 2023. The tax credits and associated interest income credits are expected to be used to reduce federal non-income tax liabilities through the end of calendar year 2027. The tax credits were recognized as both current and noncurrent assets on the consolidated balance sheet based on when the credits are expected to be realized. Additionally, any unused tax credits will earn tax-exempt interest income through the expiration date, which can be used to reduce both non-income tax and income tax liabilities. The Brazilian federal tax authority has formally acknowledged the tax credits and related interest credits to be used by one of the Company's Brazilian subsidiaries. The ruling resulted in a net income tax benefit of $24.2 million in fiscal year 2023. The net income tax benefit included a $2.4 million income tax provision for U.S. federal income taxes related to the fiscal year 2018 consolidated federal tax return that will need to be amended. The Company sold its idled Tanzania operations and recognized $1.1 million of income taxes in the fiscal year ended March 31, 2023. In fiscal year 2022, the Company recognized a $1.7 million benefit related to a final tax law ruling at a foreign subsidiary. In fiscal year 2021, the Company recognized a $4.4 million net tax benefit for final U.S. tax regulations issued for hybrid dividends paid by foreign subsidiaries. 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,
| 2023 |  | 2022 |  | 2021
United States | $ | 27,942 |  |  | $ | 74,553 |  |  | $ | 30,060 |
Foreign | 114,027 |  |  | 67,714 |  |  | 95,666 |
Total | $ | 141,969 |  |  | $ | 142,267 |  |  | $ | 125,726 |
Deferred Income Tax Liabilities and Assets Significant components of deferred tax liabilities and assets were as follows:
| March 31,
| 2023 |  | 2022
Liabilities |  |  |
Foreign withholding taxes | $ | 17,123 |  |  | $ | 19,353 |
Property, plant and equipment | 10,617 |  |  | 10,567 |
Undistributed earnings | 3,772 |  |  | 3,004 |
Operating lease right-of-use assets | 5,791 |  |  | 6,621 |
Goodwill and other intangible assets | 33,781 |  |  | 34,584 |
Local currency exchange gains of foreign subsidiaries | 1,432 |  |  | 4,094 |
All other | 3,239 |  |  | 3,414 |
Total deferred tax liabilities | $ | 75,755 |  |  | $ | 81,637 |
Assets |  |  |
Employee benefit plans | $ | 15,654 |  |  | $ | 16,138 |
Reserves and accruals | 5,692 |  |  | 9,844 |
Deferred income | 5,573 |  |  | 4,127 |
Operating lease right-of-use liabilities | 5,500 |  |  | 6,538 |
Currency translation losses of foreign subsidiaries | 2,173 |  |  | 2,173 |
Local currency exchange losses of foreign subsidiaries | 1,084 |  |  | 595 |
Foreign tax credit carryforward | 5,578 |  |  | 2,538 |
Capital loss carryforwards | 4,197 |  |  | — |
All other | 11,016 |  |  | 7,148 |
Total deferred tax assets | 56,467 |  |  | 49,101 |
Valuation allowance | (10,234) |  |  | (3,182) |
Net deferred tax assets | $ | 46,233 |  |  | $ | 45,919 |
At March 31, 2023, 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,
| 2023 |  | 2022 |  | 2021
Continuing operations | $ | 11,733 |  |  | $ | 38,663 |  |  | $ | 29,412 |
Other comprehensive loss | 3,551 |  |  | 6,555 |  |  | 9,563 |
Total | $ | 15,284 |  |  | $ | 45,218 |  |  | $ | 38,975 |
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,
| 2023 |  | 2022 |  | 2021
Liability for uncertain tax positions, beginning of year | $ | 2,024 |  |  | $ | 2,437 |  |  | $ | 2,377 |
Additions: |  |  |  |  |
Related to tax positions for the current year | 1,198 |  |  | 48 |  |  | 49 |
Related to tax positions for prior years | — |  |  | 328 |  |  | — |
Reductions: |  |  |  |  |
Due to lapses of statutes of limitations | (75) |  |  | (56) |  |  | (135) |
Due to tax settlements | (1,661) |  |  | (814) |  |  | — |
Effect of currency rate changes | (71) |  |  | 81 |  |  | 146 |
Liability for uncertain tax positions, end of year | $ | 1,415 |  |  | $ | 2,024 |  |  | $ | 2,437 |
The liability for uncertain tax positions at March 31, 2023 includes approximately $1.4 million that 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, 2024. 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. The $1.7 million settlement in fiscal year 2023 represents the resolution of a tax matter with a foreign tax authority. The $0.8 million settlement in fiscal year 2022 represents the resolution of a tax matter with a local country taxing authority. The Company accrued $0.5 million of the fiscal year 2022 settlement in prior fiscal years. For fiscal year ended March 31, 2023, the Company recognized $1.8 million as a reduction to interest expense related to an uncertain tax position on the Tanzania operations that were sold in fiscal year 2023. 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 year 2022. Amounts accrued or reversed for penalties were not material for fiscal years 2023 through 2021, and liabilities recorded for penalties at March 31, 2023 and 2022 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, 2023, the Company's earliest open tax year for U.S. federal income tax purposes was its fiscal year ended March 31, 2018. 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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://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 https://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 https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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