Income Taxes (Tables)

12 Months Ended

Mar. 31, 2020

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