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Income Taxes | 12 Months Ended
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Mar. 31, 2020
Income Tax Disclosure [Text Block] | 17. Income Taxes On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“Tax Reform Act” or “the Act”). The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, assessing a one-time transition tax on a deemed repatriation of non-previously taxed earnings of foreign subsidiaries, and implementing a territorial tax system. While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The Act also provides for the foreign-derived intangible income (“FDII”) deduction for corporations that derive gross income from export activities The GILTI provisions require the Company to include in its U.S. income tax return any foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company recorded $525,000 and $0 additional income tax expense as a result of GILTI for the years ended March 31, 2020 and 2019, respectively. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the years ended March 31, 2020 and 2019. The BEAT provisions in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. The BEAT tax had no impact on the Company's consolidated financial statements for the years ended March 31, 2020 and 2019. The FDII provisions of the Act provide an incentive to domestic corporations in the form of a lower tax rate on income derived from tangible and intangible products and services in foreign markets. This lower tax rate is accomplished via an additional tax deduction based on a percentage of qualifying sales. The FDII deduction provided the Company an additional tax benefit of $1,029,000 and $945,000 in the years ended March 31, 2020 and 2019, respectively. SAB 118 measurement period adjustments On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. We applied the guidance in SAB 118 when accounting for the enactment-date effects of the Act in 2017 and throughout 2018. At December 31, 2017, we had not completed our accounting for all of the enactment-date income tax effects of the Act under ASC 740, Income Taxes, for the following aspects: remeasurement of deferred tax assets and liabilities and one-time transition tax. As of December 31, 2018, we completed our accounting for all of the enactment-date income tax effects of the Act, the impacts of which are summarized below. One-time transition tax The one-time transition tax is based on our total post-1986 earnings and profits ("E&P"), the tax on which we previously substantially deferred from U.S. income taxes under U.S. law. We recorded a provisional amount for our one-time transition tax liability for each of our foreign subsidiaries, resulting in a transition tax liability of $1,500,000 at March 31, 2018. Upon further analysis of the Act, Notices and regulations issued and proposed by the U.S. Department of the Treasury and the Internal Revenue Service, we finalized our calculations of the transition tax liability during the quarter ended December 31, 2018. We decreased our March 31, 2018 provisional amount of $1,500,000 to zero, the effect of which is included as a component of income tax expense in fiscal 2019. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to the COVID-19 pandemic. Other tax jurisdictions have enacted similar legislation. The Company is currently evaluating the impact of the CARES Act and other, similar, legislation, but at present does not expect that the provision of the legislation would result in a material income tax benefit. Deferred tax assets and liabilities As of December 31, 2017 we remeasured certain deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future (which was generally 21%), by recording a provisional amount of $16,128,000. Based upon further analysis completed during the measurement period, we reduced this estimate by $26,000 during the year ended March 31, 2018. No further adjustments were made to this provisional amount during the measurement period. The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income from continuing operations before income tax expense. The sources and tax effects of the differences were as follows:
|  | Year Ended March 31,
|  | 2020 |  | 2019 |  | 2018
Statutory federal income tax rate (1) |  | 21.00 | % |  | 21.00 | % |  | 31.55 | %
Expected tax at statutory rate |  | $ | 16,203 |  |  | $ | 11,108 |  |  | $ | 15,676 |
Effect of Tax Reform Act (2), (3) |  | — |  |  | (1,500 | ) |  | 17,602 |
State income taxes net of federal benefit |  | 1,397 |  |  | 1,728 |  |  | (37 | )
Foreign taxes at rates other than statutory federal rate |  | 1,102 |  |  | (145 | ) |  | (2,667 | )
Net loss on sale of businesses (5) |  | — |  |  | 4,041 |  |  | — |
Permanent items (8), (9) |  | 266 |  |  | (1,694 | ) |  | (2,220 | )
Valuation allowance (4), (6) |  | (1,184 | ) |  | 13,190 |  |  | (104 | )
Foreign tax credits (4) |  | — |  |  | (15,371 | ) |  | — |
Federal tax credits (7) |  | (1,903 | ) |  | (1,376 | ) |  | (612 | )
Other |  | 1,603 |  |  | 340 |  |  | (18 | )
Actual tax provision expense |  | $ | 17,484 |  |  | $ | 10,321 |  |  | $ | 27,620 |
(1) For fiscal 2018, represents the blended rate of 35 percent for the first three quarters of the fiscal year and 21 percent for the fourth quarter. (2) For fiscal 2018, represents the discrete expense of the one-time transition tax ($1,500,000) and the remeasurement of our net U.S. deferred tax assets at the new lower U.S. corporate income tax rate ($16,102,000). (3) For fiscal 2019, represents the discrete benefit of the reduction of the one-time transition tax of $1,500,000 recorded in fiscal 2018 to zero. (4) For fiscal 2019, primarily represents foreign tax credits generated by the one-time transition tax calculation and valuation allowance as the Company believes their utilization is uncertain. (5) For fiscal 2019, represents losses on sales of businesses that are not deductible for income tax purposes. (6) For fiscal 2020, represents the reversal of a valuation allowance on certain foreign tax credits offset by increases in valuation allowances required in certain foreign jurisdiction. (7) Federal tax credits include research and development credits and minimum tax credits. (8) For fiscal 2019, permanent items include a FDII deduction of $945,000. (9) For fiscal 2020, permanent items include a net GILTI inclusion of $525,000 and a FDII deduction of $1,029,000. The provision for income tax expense (benefit) consisted of the following:
|  | Year Ended March 31,
|  | 2020 |  | 2019 |  | 2018
Current income tax expense (benefit): |  |  |  |  |  |
United States Federal |  | $ | (2,491 | ) |  | $ | (1,663 | ) |  | $ | 1,109 |
State taxes |  | 626 |  |  | 394 |  |  | 402 |
Foreign |  | 11,984 |  |  | 12,548 |  |  | 6,141 |
Deferred income tax expense (benefit): |  |  |  |  |  |
United States |  | 7,827 |  |  | 5,873 |  |  | 21,177 |
Foreign |  | (462 | ) |  | (6,831 | ) |  | (1,209 | )
|  | $ | 17,484 |  |  | $ | 10,321 |  |  | $ | 27,620 |
The Company applies the liability method of accounting for income taxes as required by ASC Topic 740, “Income Taxes.” The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
|  | March 31,
|  | 2020 |  | 2019
Deferred tax assets: |  |  |  |
Federal net operating loss carryforwards |  | $ | 18,091 |  |  | $ | 21,990 |
State and foreign net operating loss carryforwards |  | 7,142 |  |  | 8,069 |
Employee benefit plans |  | 31,471 |  |  | 27,955 |
Insurance reserves |  | 3,216 |  |  | 3,204 |
Accrued vacation and incentive costs |  | 3,218 |  |  | 4,766 |
Federal tax credit carryforwards |  | 11,922 |  |  | 17,685 |
ASC 842 Lease Liability |  | 9,048 |  |  | — |
Equity compensation |  | 1,974 |  |  | 2,285 |
Other |  | 7,319 |  |  | 4,449 |
Valuation allowance |  | (15,036 | ) |  | (16,881 | )
Deferred tax assets after valuation allowance |  | 78,365 |  |  | 73,522 |
Deferred tax liabilities: |  |  |  |
Property, plant, and equipment |  | (1,962 | ) |  | (2,429 | )
ASC 842 Right-of-Use Asset |  | (8,938 | ) |  | — |
Intangible assets |  | (59,397 | ) |  | (63,468 | )
Total deferred tax liabilities |  | (70,297 | ) |  | (65,897 | )
Net deferred tax assets (liabilities) |  | $ | 8,068 |  |  | $ | 7,625 |
The net deferred tax asset increased in fiscal 2020 primarily as a result of an increase is accrued employee benefits and the amortization of certain intangible assets, offset by the utilization of federal and state net operating losses and certain tax credits. The gross amount of the Company’s deferred tax assets were $93,401,000 and $90,403,000 at March 31, 2020 and 2019, respectively. The valuation allowance includes $2,696,000, $2,372,000, and $3,837,000 related to foreign net operating losses at March 31, 2020, 2019, and 2018, respectively. The Company’s foreign subsidiaries have net operating loss carryforwards that expire in periods ranging from five years to indefinite. The federal net operating losses arose from the acquisition of Magnetek and have expiration dates ranging from 2021 through 2035 and are subject to certain limitations under U.S. tax law. The state net operating losses have expiration dates ranging from 2020 through 2038. The federal tax credits have expiration dates ranging from 2032 to indefinite. Deferred income taxes are classified within the consolidated balance sheets based on the following breakdown:
|  | March 31,
|  | 2020 |  | 2019
Net non-current deferred tax assets |  | $ | 26,281 |  |  | $ | 27,707 |
Net non-current deferred tax liabilities |  | (18,213 | ) |  | (20,082 | )
Net deferred tax assets (liabilities) |  | $ | 8,068 |  |  | $ | 7,625 |
Net non-current deferred tax liabilities are included in other non-current liabilities. Income from continuing operations before income tax expense includes foreign subsidiary income of $37,577,000, $14,362,000, and $25,144,000 for the years ended March 31, 2020, 2019, and 2018, respectively. As of March 31, 2020, the Company had approximately $137,000,000 of undistributed earnings of foreign subsidiaries. These earnings are considered to be permanently invested in operations outside the U.S. with the exception of the current earnings from one foreign subsidiary. Any repatriation of these amounts would not be expected to result in a material increase to income tax expense due to the one-time transition tax and the new U.S. territorial tax system. Determination of the amount of unrecognized deferred U.S. income tax liability with respect to such earnings is not practicable. During fiscal 2018, the Company adopted ASU No. 2016-09. There were shares of common stock issued through restricted stock units, the exercise of non-qualified stock options, or through the disqualifying disposition of incentive stock options in the years ended March 31, 2020 and 2019. The tax effect to the Company from these share transactions during fiscal 2020 and 2019 was a reduction to income tax expense of ($169,000) and ($1,129,000), respectively. Changes in the Company’s uncertain income tax positions, excluding the related accrual for interest and penalties, are as follows:
|  | 2020 |  | 2019 |  | 2018
Beginning balance |  | $ | 936 |  |  | $ | 592 |  |  | $ | 975 |
Additions for tax positions of the current year |  | — |  |  | 550 |  |  | 444 |
Reductions for prior year tax positions |  | (802 | ) |  | (141 | ) |  | — |
Foreign currency translation |  | (2 | ) |  | (65 | ) |  | 20 |
Lapses in statutes of limitation |  | — |  |  | — |  |  | (847 | )
Ending balance |  | $ | 132 |  |  | $ | 936 |  |  | $ | 592 |
The Company had $46,000 and $38,000 accrued for the payment of interest and penalties at March 31, 2020 and 2019, respectively. The Company recognizes interest expense or penalties related to uncertain tax positions as a part of income tax expense in its consolidated statements of operations. All of the unrecognized tax benefits as of March 31, 2020 would impact the effective tax rate if recognized. The Company and its subsidiaries file income tax returns in the U.S., various state, local, and foreign jurisdictions. The Internal Revenue Service has completed an examination of the Company’s U.S. income tax returns for fiscal 2015 resulting in no adjustments. The Company has no current U.S. income tax examinations or audits. The Company’s major tax jurisdictions are the United States and Germany. With few exceptions, the Company is no longer subject to tax examinations by tax authorities in the United States for tax years prior to March 31, 2016 and in Germany for tax years prior to March 31, 2012. The Company has a current tax examination in Germany for fiscal years 2012 to 2014. The Company anticipates that total unrecognized tax benefits will change due to the settlement of audits in certain foreign jurisdictions prior to March 31, 2021.

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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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