In December 2017, the Tax Cuts and Jobs Act (“Tax Reform Act”), was signed into law. The Tax Reform Act makes broad and complex changes to the U.S. tax code that were effective January 1, 2018. The Tax Reform Act included significant changes in tax laws, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings on foreign subsidiaries, if applicable; (3) adding a new provision designed to tax global intangible low-taxed income (“GILTI”); and (4) imposing additional limitation on the deductibility of executive compensation and certain employee fringe benefits. ASC 740, “Income Taxes,” requires that the effects of changes in tax laws or rates be recognized in the period in which the law is enacted. Those effects, both current and deferred, are reported as part of the tax provision, regardless of income in which the underlying pretax income (expense) or asset (liability) was or will be reported.

As a result of the Tax Reform Act, the Company’s U.S. federal statutory corporate income tax rate of 21% was applied in the computation of the income tax provision for the years ended March 31, 2020 and 2019 and a blended U.S. federal statutory corporate income tax rate of 31.5% was applied in the computation of the income tax provision for the year ended March 31, 2018. The blended U.S. federal statutory corporate tax rate of 31.5% represents the average rate between the pre-enactment U.S. federal statutory corporate tax rate of 35% prior to the January 1, 2018 effective date and the post-enactment U.S. federal statutory corporate tax rate of 21% thereafter. As a result of the reduction in the federal statutory tax rate, the Company evaluated its ability to utilize its foreign tax credits carryforward. The Company has concluded that it will be able to use these foreign tax credits within the carryforward period.

The Company remeasured its net deferred tax assets due to the lower U.S. federal statutory corporate tax rate and recorded an income tax expense adjustment of $21.4 million during the year ended March 31, 2018. The Tax Reform Act allows for a 100% deduction for the potential repatriation of foreign subsidiary earnings with minimal U.S. income tax consequences other than the one-time transition tax. Since most of the Company’s cash and cash equivalents held by foreign subsidiaries are disregarded entities for domestic tax purposes, any repatriation of such funds to the U.S. would likely have a nominal tax impact. In addition, the Company has elected to treat GILTI tax as a period expense and provide for the tax in the year that the tax is incurred. The federal income tax expenses associated with GILTI was $0 and $0.5 million in the years ended March 31, 2020 and 2019, respectively.

The Company’s income tax provision was $53.8 million, $4.3 million and $48.3 million for the fiscal years ended March 31, 2020, 2019 and 2018, respectively. The Company’s effective tax rate was 21.0%, 1.6% and 30.1% for the fiscal years ended March 31, 2020, 2019 and 2018, respectively.

ASU 2016-09 requires excess tax benefits and shortfalls to be recognized in the income tax provision as discrete items in the period when restricted stock units vest or stock option exercises occur, whereas previously such income tax effects were recorded as part of additional paid-in capital only when the related tax deduction resulted in a reduction of current income taxes payable. The Company recognized excess tax benefits associated with stock-based awards of $14.8 million, $69.3 million and $31.0 million as an income tax benefit for fiscal years ended March 31, 2020, 2019 and 2018, respectively. The amount of future excess tax benefits or shortfalls will likely fluctuate from period to period based on the price of the Company’s stock, the number of restricted stock units that vest or stock options that are exercised, and the fair value assigned to such stock-based awards under U.S. GAAP.

The components of the Company’s income tax provision for the fiscal years ended March 31, 2020, 2019 and 2018 are as follows:

	Fiscal Years Ended March 31,
	2020			2019			2018
				(in $000's)
Income before provision for income taxes:
United States	$	214,825		$	223,340		$	134,006
Foreign		42,000			40,020			26,431
Income before income taxes		256,825			263,360			160,437

Current tax expense:
Federal		—			—			752
State		6,563			564			1,491
Foreign		14,300			11,525			3,400
		20,863			12,089			5,643
Deferred tax expense (benefit):
Federal		33,239			(7,153	)		38,848
State		1,584			(1,503	)		(1,014	)
Foreign		(1,870	)		911			4,790
		32,953			(7,745	)		42,624
Total income tax provision	$	53,816		$	4,344		$	48,267

	March 31, 2020			March 31, 2019
	(in $000's)
Deferred tax assets
Net operating loss and tax credit carryforwards	$	50,604		$	62,835
Stock-based compensation		13,607			15,488
Nondeductible reserves and accruals		9,570			9,739
Foreign net operating loss carryforwards		6,778			7,360
Deferred revenue		4,404			3,677
Depreciation and amortization		114			485
Other, net		949			128
	$	86,026		$	99,712
Deferred tax liabilities
Goodwill		(7,843	)		(7,136	)
In-process research and development		(4,564	)		(4,593	)
Depreciation		(9,211	)		(2,175	)
Basis differences on other investments		(6,124	)		(7,146	)
Domestic deferred tax liability on foreign net operating loss carryforwards		(584	)		(680	)
		(28,326	)		(21,730	)

Net deferred tax assets		57,700			77,982
Valuation allowance		(15,170	)		(1,302	)
Net deferred tax assets	$	42,530		$	76,680

Reported as:
Long-term deferred tax assets, net	$	43,336		$	77,502
Long-term deferred tax liabilities		(806	)		(822	)
Net deferred tax assets	$	42,530		$	76,680

The significant differences between the statutory and effective income tax rate for the years ended March 31, 2020, 2019, and 2018 consist of the following items:

	Fiscal Years Ended March 31,
	2020				2019				2018
Statutory income tax rate		21.0		%		21.0		%		31.5		%
(Decrease) increase resulting from:
Excess tax benefits from stock-based awards		(5.2	)			(24.1	)			(17.2	)
Foreign taxes		—				4.1				2.2
Permanent differences		5.0				1.8				2.4
Credits		(10.8	)			(1.5	)			(4.9	)
State taxes, net		3.1				0.1				2.0
Change in valuation allowance		5.3				(0.4	)			0.5
Effect of the Tax Reform Act on net deferred tax assets		—				—				13.0
Rate differential on foreign operations		3.2				0.2				—
Other		(0.6	)			0.4				0.6
Effective tax rate		21.0		%		1.6		%		30.1		%

The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realization of deferred tax assets requires significant management judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluates all available positive and negative evidence, and weights the evidence based on its objectivity.

As of March 31, 2020 and 2019, respectively, the Company maintained a valuation allowance of $15.2 million and $1.3 million for deferred tax assets primarily related to foreign tax credits that are expected not to be utilizable in the foreign branch basket. Based on the review of all available evidence, the Company recorded a valuation allowance to reduce these deferred tax assets to the amount that is more likely than not to be realizable as of March 31, 2020 and 2019.

Changes in the valuation allowance for deferred tax assets during the fiscal years ended March 31, 2020, 2019 and 2018 were as follows:

	Fiscal Years Ended March 31,
	2020		2019			2018
	(in $000's)
Balance at beginning of year	$	1,302	$	1,652		$	2,468
Increase		13,868		—			325
Decrease		—		(350	)		(1,141	)
Balance at end of year	$	15,170	$	1,302		$	1,652

As of March 31, 2020, the Company had foreign net-operating losses (“NOLs”) of approximately $24.1 million. As of March 31, 2020, the Company had foreign tax credits of $21.5 million which expire in varying years from fiscal 2025 through fiscal 2030. In addition, at March 31, 2020, the Company had federal and state research and development credit carryforwards of approximately $20.5 million and $11.3 million, respectively, which expire in varying years from fiscal 2021 through fiscal 2040.

The Company’s operating income outside the U.S. is deemed to be permanently reinvested in foreign jurisdictions. The Tax Reform Act allows for a 100% deduction for the repatriation of foreign subsidiary earnings with minimal U.S. income tax consequences other than a one-time deemed repatriation toll charge. Since most of the Company’s cash and cash equivalents are held by foreign subsidiaries which are disregarded entities for domestic tax purposes, any repatriation of such funds to the U.S. would likely have a nominal tax impact, if any.

As of March 31, 2020 and 2019, the Company has no material uncertain tax positions, and no interest and penalties on uncertain tax positions were recognized during the years ended March 31, 2020, 2019 and 2018, respectively. The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of multiple state and foreign jurisdictions. During fiscal 2019, the Company closed an income tax audit in Germany, which covered fiscal years 2012 through 2015. The Company also closed an Internal Revenue Service (“IRS”) audit during fiscal 2019 relating to its fiscal year 2016 tax return. These audits did not materially impact the Company’s financial statements. All other tax years remain subject to examination by the IRS, state and foreign tax authorities.