Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.19.1
Income Taxes (Tables)
12 Months Ended
Mar. 31, 2019
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,
 
 
2019
 
2018
 
2017
Domestic (U.S.) (1)
 
$
95,639

 
$
141,582

 
$
(67
)
Foreign (Outside U.S.) (1)
 
74,792

 
45,485

 
9,875

Total (1)
 
$
170,431

 
$
187,067

 
$
9,808

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,
 
 
2019
 
2018
 
2017
Current:
 
 
 
 
 
 
Federal
 
$
170

 
$
223

 
$

State and local
 
161

 
50

 
62

Foreign
 
9,966

 
8,295

 
4,247

Total current income tax expense from continuing operations
 
10,297

 
8,568

 
4,309

Deferred:
 
 
 
 
 
 
Federal
 
(43,804
)
 
(807
)
 
(6
)
State and local
 
(773
)
 
(96
)
 
(97
)
Foreign (1)
 
(5,180
)
 
1,467

 
88

Deferred tax expense (benefit) from continuing operations (1)
 
(49,757
)
 
564

 
(15
)
Provision for income tax expense (benefit) (1)
 
$
(39,460
)
 
$
9,132

 
$
4,294

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,
 
 
2019
 
2018
 
2017
Amount computed using the statutory rate (1)
 
$
35,791

 
$
59,162

 
$
3,722

Change in U.S. valuation allowance
 
(67,761
)
 
(66,948
)
 
(7,080
)
Unremitted earnings of foreign subsidiaries
 

 

 
2,127

Effect of prior year adjustments (2)
 
2,450

 
(1,337
)
 
1,789

IRC section 162(m) limitation (3)
 
4,553

 

 

Expired foreign tax credits
 

 
407

 
4,766

Taxable foreign source income
 
3,502

 
22,238

 
1,835

(Put)/call option valuation impact
 

 

 
(3,745
)
Non-taxable gain from bargain purchase
 

 
(41,292
)
 

Deduction related to APA settlement
 
(2,309
)
 

 

Tax-deductible equity compensation
 
(4,215
)
 
(5,699
)
 
(44
)
Other non-deductible expenses
 
(44
)
 
220

 
(893
)
Differences due to U.S. tax law changes (4)
 

 
50,420

 

State income taxes, net of federal taxes (5)
 
(695
)
 
(3,325
)
 
(35
)
Change in foreign operations tax exposure reserves
 
132

 
1,059

 
108

Foreign tax rate differential
 
6,501

 
(400
)
 
587

Change in foreign tax law
 
(1,956
)
 
251

 
144

Change in foreign operations valuation allowance (6)
 
(41,133
)
 
(6,676
)
 
983

Nondeductible expenses related to antitrust litigation
 
14,360

 
488

 

Other effect of foreign operations
 
11,364

 
564

 
30

Provision for income tax expense (benefit)
 
$
(39,460
)
 
$
9,132

 
$
4,294

___________________________________________
(1) The statutory income tax rate for the fiscal year ended March 31, 2017 is 35%. The Tax Cuts and Jobs Act 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 after December 31, 2017. The statutory income tax rate for the fiscal year ended March 31, 2019 is 21%.
(2) The effect of prior year adjustments was offset by a full valuation allowance resulting in no impact on the provision for income taxes.
(3) Fiscal year ended March 31, 2019 difference consist of $1.5 million related to the expansion of the Sec. 162(m) limitation due to tax law changes.
(4) Fiscal year end March 31, 2018 differences due to tax law changes consists of $4.8 million related to foreign earnings and $45.6 million related to tax rate adjustment. $45.6 million related to tax rate adjustment is the gross deferred rate change, which is offset by valuation allowance adjustment, resulting in a net benefit of $0.8 million.
(5) Fiscal year ended March 31, 2018 difference 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.
(6) The change in foreign operations valuation allowance excludes other comprehensive income and currency translation adjustments of $3.8 million, $(3.4) million, and $0.9 million for fiscal years ended 2019, 2018 and 2017, respectively, which has no impact on the provision for income taxes.
Schedule of the components of deferred tax assets and liabilities
The change in net deferred income tax asset (liability) for the current year is presented below (amounts in thousands):
Balance at March 31, 2018 (1)
$
(1,221
)
Deferred income taxes related to continuing operations
49,757

Deferred income taxes related to other comprehensive income
(223
)
Foreign currency translation
(95
)
Balance at March 31, 2019
$
48,218

___________________________________________________________
(1) March 31, 2018 adjusted due to the
The components of deferred tax assets and liabilities are as follows (amounts in thousands):
 
 
March 31,
 
 
2019
 
2018
Deferred tax assets:
 
 
 
 
Net operating loss carry forwards
 
$
78,986

 
$
115,064

Sales allowances and inventory reserves
 
10,967

 
9,675

Medical and employee benefits
 
35,298

 
38,572

Depreciation and differences in basis
 
5,318

 
6,241

Accrued restructuring
 
469

 
2,551

Anti-trust fines and settlements
 
910

 
16,575

Tax credits
 
3,394

 
4,208

Stock-based compensation
 
5,589

 
1,765

Other(1)
 
1,342

 
2,812

Total deferred tax assets before valuation allowance
 
142,273

 
197,463

Less valuation allowance
 
(58,658
)
 
(171,401
)
Total deferred tax assets
 
83,615

 
26,062

Deferred tax liabilities:
 
 
 
 
Unremitted earnings of subsidiaries
 
(21,850
)
 
(11,678
)
Amortization of intangibles and debt discounts
 
(11,996
)
 
(14,054
)
Non-amortized intangibles
 
(1,551
)
 
(1,551
)
Total deferred tax liabilities
 
(35,397
)
 
(27,283
)
Net deferred tax assets (liabilities)
 
$
48,218

 
$
(1,221
)
__________________________________________________________________
(1)
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, 2016
$
170,917

Charge (benefit) to costs and expenses
(2,094
)
Deductions
(4,925
)
Balance at March 31, 2017
163,898

Charge 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

Schedule of tax credit carryforwards available
At March 31, 2019, 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
 
$
1,253

 
2024
Texas franchise tax credits
 
2,141

 
2026
Schedule of reconciliation of gross unrecognized tax benefits (excluding interest and penalties)
At March 31, 2019, the Company had $7.7 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,
 
 
2019
 
2018
 
2017
Beginning of fiscal year
 
$
8,680

 
$
7,390

 
$
7,103

Additions from business combinations
 

 
1,270

 

Additions for tax positions of the current year
 
2,027

 
1,078

 
762

Additions for tax positions of prior years
 
519

 

 

Reductions for tax positions of prior years
 
(633
)
 
(1,058
)
 
(64
)
Lapse in statute of limitations
 
(9
)
 

 
(411
)
Settlements
 
(2,923
)
 

 

End of fiscal year
 
$
7,661

 
$
8,680

 
$
7,390