Income Taxes

Changes in Tax Law

On December 22, 2017, H.R.1, also known as the Tax Cuts and Jobs Act (referred to herein as the "Tax Reform Act"), was enacted into law. The Tax Reform Act includes significant changes to the United States (US) corporate income tax system, including a permanent reduction in the federal corporate income tax rate from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, the transition of the US tax regime from a worldwide tax system to a territorial tax system, and provisions aimed at preventing base erosion of the US tax base.

On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118 (SAB 118) which provides guidance on accounting for the impact of the Tax Reform Act. SAB 118 provides a measurement period, which should not extend beyond one year from the enactment date, during which the Company may complete the accounting for the impacts of the Tax Reform Act under Accounting Standard Codification (ASC) Topic 740. In accordance with SAB 118, the Company must reflect the income tax effects of the Tax Reform Act in the reporting period in which the accounting under ASC 740 is complete.

To the extent accounting for certain income tax effects of the Tax Reform Act is incomplete, the Company can determine a reasonable estimate for those effects and record a provisional estimate in the condensed consolidated financial statements in the first reporting period in which a reasonable estimate can be made. If the Company cannot determine a provisional estimate to be included in the condensed consolidated financial statements, the Company can continue to apply ASC 740 based on the provisions of the tax laws that were in effect immediately prior to the Tax Reform Act being enacted. If the Company is unable to provide a reasonable estimate of the impacts of the Tax Reform Act in a reporting period, a provisional amount must be recorded in the first reporting period in which a reasonable estimate can be determined.

During the quarter ended December 31, 2017, the Company recorded the following provisional estimates for the discrete income tax expense impacts from the Tax Reform Act in the condensed consolidated statements of comprehensive income:


•	Approximately $52,800 related to the US income tax associated with deemed repatriation of accumulated foreign earnings through the fiscal year ended March 31, 2017, of which $4,557 is payable within 12 months and recorded in current income taxes payable in the condensed consolidated balance sheets.


•	Non-cash income tax expense of approximately $13,400 to re-measure its deferred tax assets and liabilities to the income tax rates applicable for future periods in which they are expected to reverse.

For the fiscal year ending March 31, 2018, the Company has considered the impact of the Tax Reform Act on its blended consolidated annual effective tax rate. The Tax Reform Act resulted in an increase in the Company's annual effective tax rate of $8,802, driven by a provisional estimate associated with the deemed repatriation of foreign earnings forecasted for the nine months ended December 31, 2017, of which $756 is payable within 12 months and recorded in current income taxes payable in the condensed consolidated balance sheets. This was partially offset by a reduction of the US federal income tax rate to 31.5%.

The Company recorded these provisional estimates based on currently available information that is subject to interpretation and continues to evolve. These estimates may be impacted by a number of additional considerations, including, but not limited to, the state level income tax impacts of the Tax Reform Act, clarifications of or changes to the Tax Reform Act (including the issuance of final regulations), additional guidance issued by the SEC or FASB, the Company's ongoing analysis of historical earnings and profits as well as tax pools, which may result in changes to various assumptions underlying the estimates, and the Company's actual earnings for the fiscal year ending March 31, 2018.

The Tax Reform Act includes other provisions with effective dates for the Company beginning January 1, 2018 and beyond. For other changes that impact business related income, exclusions, deductions and credits that cannot yet be quantified, the Company continues to account for those items based on existing accounting guidance and the provisions of the tax laws in effect immediately prior to the enactment of the Tax Reform Act. The Company continues to analyze the provisions of the Tax Reform Act to fully assess the anticipated impact on its consolidated financial statements and will provide an update in its Annual Report on Form 10-K for the fiscal year ending March 31, 2018.

Unrecognized Tax Benefits

The Company has on-going income tax examinations in various state and foreign tax jurisdictions and regularly assesses tax positions taken in years open to examination. As of December 31, 2017, the Company had $10,250 of gross unrecognized tax benefits, including associated interest and penalties accrued related to tax positions that are subject to examination, of which $7,958 is recorded in long-term income tax liability and $2,292 is recorded in current income taxes payable in the condensed consolidated balance sheets. The Company recorded a net decrease during the nine months ended December 31, 2017 for unrecognized tax benefits of $3,720, including a decrease of $4,437 related to settlements with foreign and state tax authorities, partially offset by an additional tax accrual of $717 for federal and state unrecognized tax benefits in the condensed consolidated balance sheets. During the nine months ended December 31, 2016, the Company had no settlements or additional accruals of unrecognized tax benefits.

Refer to Note 1, "General," in the section entitled "Recent Accounting Pronouncements" for more information regarding recording previously unrecognized excess tax benefits for share-based awards as a cumulative adjustment to retained earnings in response to the adoption of ASU No. 2016-09.