Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.20.1
Income Taxes (Tables)
12 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Schedule of components of income (loss) before income taxes and equity loss from NEC TOKIN
The components of income before income taxes and equity income (loss) from equity method investments are as follows (amounts in thousands):
 
 
Fiscal Years Ended March 31,
 
 
2020
 
2019
 
2018
Domestic (U.S.) 
 
$
31,937

 
$
95,639

 
$
141,582

Foreign (Outside U.S.)
 
47,894

 
74,792

 
45,485

Total 
 
$
79,831

 
$
170,431

 
$
187,067


Schedule of the provision (benefit) for income tax expense
The provision for income tax expense (benefit) is as follows (amounts in thousands):
 
 
Fiscal Years Ended March 31,
 
 
2020
 
2019
 
2018
Current:
 
 
 
 
 
 
Federal
 
$
3,387

 
$
170

 
$
223

State and local
 
522

 
161

 
50

Foreign
 
10,288

 
9,966

 
8,295

Total current income tax expense
 
14,197

 
10,297

 
8,568

Deferred:
 
 
 
 
 
 
Federal
 
16,486

 
(43,804
)
 
(807
)
State and local
 
871

 
(773
)
 
(96
)
Foreign
 
6,972

 
(5,180
)
 
1,467

Deferred tax expense (benefit)
 
24,329

 
(49,757
)
 
564

Provision for income tax expense (benefit)
 
$
38,526

 
$
(39,460
)
 
$
9,132



Schedule of reconciliation of the statutory federal income tax rate to the effective income tax rate
Differences between the provision for income taxes on earnings from continuing operations and the amount computed using the U.S. Federal statutory income tax rate are as follows (amounts in thousands):
 
 
Fiscal Years Ended March 31,
 
 
2020
 
2019
 
2018
Amount computed using the statutory rate (1)
 
21.0
 %
 
21.0
 %
 
31.6
 %
Change in U.S. valuation allowance
 
0.2

 
(39.8
)
 
(35.7
)
Effect of prior year adjustments
 
6.1

 
1.4

 
(0.7
)
IRC section 162(m) limitation (2)
 
1.1

 
2.7

 

Taxable foreign source income
 
6.0

 
2.1

 
11.8

Other current year adjustments
 
2.1

 

 
0.3

Non-taxable gain from bargain purchase
 

 

 
(22.0
)
Deduction related to APA settlement
 

 
(1.4
)
 

Tax-deductible equity compensation
 
(1.3
)
 
(2.5
)
 
(3.0
)
Differences due to U.S. tax law changes (3)
 
0.2

 

 
26.9

State income taxes, net of federal taxes (4)
 
1.2

 
(0.4
)
 
(1.8
)
Change in U.S. tax exposure reserves
 
3.0

 

 

Change in foreign operations tax exposure reserves
 
1.0

 
0.1

 
0.5

Foreign tax rate differential
 
5.4

 
3.8

 
(0.2
)
Change in foreign tax law
 
0.1

 
(1.2
)
 
0.1

Change in foreign operations valuation allowance
 
(0.4
)
 
(24.1
)
 
(3.6
)
Nondeductible expenses related to antitrust litigation
 

 
8.4

 
0.3

Other effect of foreign operations
 
2.6

 
6.7

 
0.4

Provision for income tax expense (benefit)
 
48.3
 %
 
(23.2
)%
 
4.9
 %
______________________________________________________________________________
(1) The statutory income tax rate for the fiscal year ended March 31, 2017 was 35%. The Tax Cuts and Jobs Act (“TCJA”) enacted on December 22, 2017 reduced the U.S. federal corporate tax rate from 35% to 21%, effective January 1, 2018. Based on the fiscal year of the Company ending on March 31, the statutory income tax rate for the fiscal year ended March 31, 2018 is a blended rate of 31.6% based on the number of days in the fiscal year before January 1, 2018 and the number of days in the fiscal year after December 31, 2017. The statutory income tax rate for the fiscal years ended March 31, 2020 and 2019 is 21%.
(2) Fiscal year ended March 31, 2019 includes $1.5 million related to the expansion of the Sec. 162(m) limitation due to TCJA tax law changes.
(3) Fiscal year ended March 31, 2018 is due to tax law changes consisting of $4.8 million related to foreign earnings and $45.6 million related to TCJA tax rate adjustment.
(4) Fiscal year ended March 31, 2018 consists mainly of $3.7 million related to the revaluation of state net operating loss carryforwards as a result of the change in the federal tax rate due to the TCJA.

Schedule of the components of deferred tax assets and liabilities
The components of deferred tax assets and liabilities are as follows (amounts in thousands):
 
 
March 31,
 
 
2020
 
2019
Deferred tax assets:
 
 
 
 
Net operating loss carry forwards
 
$
60,170

 
$
78,903

Sales allowances and inventory reserves
 
10,370

 
11,076

Medical and employee benefits
 
29,890

 
35,283

Depreciation and differences in basis
 
3,193

 
5,337

Leased assets
 
573

 
201

Accrued restructuring
 
310

 
469

Anti-trust fines and settlements
 
11,883

 
910

Tax credits
 
4,934

 
3,644

Stock-based compensation
 
4,607

 
5,589

Other
 
2,641

 
970

Total deferred tax assets before valuation allowance
 
128,571

 
142,382

Less valuation allowance
 
(64,477
)
 
(58,658
)
Total deferred tax assets
 
64,094

 
83,724

Deferred tax liabilities:
 
 
 
 
Unremitted earnings of subsidiaries
 
(23,972
)
 
(21,959
)
Amortization of intangibles and debt discounts
 
(11,369
)
 
(11,996
)
Non-amortized intangibles
 
(1,587
)
 
(1,551
)
Total deferred tax liabilities
 
(36,928
)
 
(35,506
)
Net deferred tax assets (liabilities)
 
$
27,166

 
$
48,218



The change in net deferred income tax asset (liability) for fiscal year 2020 is presented below (amounts in thousands):
Balance at March 31, 2019
$
48,218

Deferred income tax resulting from business combination
399

Deferred income taxes related to continuing operations
(24,329
)
Deferred income taxes related to other comprehensive income
4,030

Foreign currency translation
(1,152
)
Balance at March 31, 2020
$
27,166


Schedule of annual activities included in the deferred tax valuation allowance
The following table presents the annual activities included in the deferred tax valuation allowance (amounts in thousands):
 
Valuation Allowance for Deferred Tax Assets
Balance at March 31, 2017
$
163,898

Charge (benefit) to costs and expenses
8,647

Deductions
(1,144
)
Balance at March 31, 2018
171,401

Charge (benefit) to costs and expenses
(112,080
)
Deductions
(663
)
Balance at March 31, 2019
58,658

Additions, Business Combination
6,547

Charge (benefit) to costs and expenses
(658
)
Deductions
(70
)
Balance at March 31, 2020
$
64,477


Schedule of tax credit carryforwards available
At March 31, 2020, the U.S. consolidated group of companies had the following tax credit carryforwards available (amounts in thousands):
 
 
Tax
Credits ($)
 
Fiscal Year
of Expiration
U.S. research credits
 
$
2,877

 
2022-2025
Texas franchise tax credits
 
1,902

 
2026
Federal business tax credits
 
33

 
2028
Foreign local tax credits
 
122

 
various

Schedule of reconciliation of gross unrecognized tax benefits (excluding interest and penalties)
At March 31, 2020, the Company had $19.4 million of unrecognized tax benefits. A reconciliation of gross unrecognized tax benefits (excluding interest and penalties) is as follows (amounts in thousands):
 
 
Fiscal Years Ended March 31,
 
 
2020
 
2019
 
2018
Beginning of fiscal year
 
$
18,877

 
$
8,680

 
$
7,390

Additions from business combinations
 

 

 
1,270

Additions for tax positions of the current year
 
490

 
2,027

 
1,078

Additions for tax positions of prior years
 
2,286

 
11,735

 

Reductions for tax positions of prior years
 
(1,831
)
 
(633
)
 
(1,058
)
Lapse in statute of limitations
 
(16
)
 
(9
)
 

Settlements
 
(439
)
 
(2,923
)
 

End of fiscal year
 
$
19,367

 
$
18,877

 
$
8,680