

	Fiscal year ended March 31,
	2020			2019			2018
Current income tax expense
Current:
Federal	$	9,185		$	6,377		$	115,315
State	2,561			5,027			3,461
Foreign	14,561			16,636			20,030
Total current income tax expense	26,307			28,040			138,806
Deferred income tax (benefit) expense
Federal	5,489			(5,031		)	(9,551		)
State	741			(669		)	789
Foreign	(22,716		)	(756		)	(11,551		)
Total deferred income tax (benefit) expense	(16,486		)	(6,456		)	(20,313		)
Total income tax expense	$	9,821		$	21,584		$	118,493



	Fiscal year ended March 31,
	2020		2019		2018
United States	$	36,193	$	53,339	$	74,440
Foreign	110,744		128,872		163,886
Earnings before income taxes	$	146,937	$	182,211	$	238,326

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. Among the significant changes resulting from the law, the Tax Act reduced the U.S. federal income tax rate from 35% to 21% effective January 1, 2018, and required companies to pay a one-time transition tax on unrepatriated cumulative non-U.S. earnings of foreign subsidiaries and created new taxes on certain foreign sourced earnings. The U.S. federal statutory tax rate for fiscal 2020 and 2019 was 21.0%.

In fiscal 2018, the Company recorded a provisional amount for the Transition Tax liability, resulting in an increase in income tax expense of $97,500. In fiscal 2019, the Company completed its accounting for the tax effects of enactment of the Tax Act. The Company recognized an income tax benefit of $13,483, net of uncertain tax positions, resulting from a decrease in the mandatory one-time transition tax on unrepatriated cumulative non-U.S. earnings of the Company's foreign businesses. The Company made the election on the 2017 Federal Income Tax Return to pay the one-time Tax Act liability over an eight-year period without interest, as allowed under the tax enactment.



	March 31,
	2020			2019
Deferred tax assets:
Accounts receivable	$	1,110		$	1,297
Inventories	5,010			4,081
Net operating loss carryforwards	44,340			48,423
Accrued expenses	26,113			21,574
Capitalized research and development costs	—			7,061
Other assets	19,793			17,656
Gross deferred tax assets	96,366			100,092
Less valuation allowance	(20,951		)	(17,519		)
Total deferred tax assets	75,415			82,573
Deferred tax liabilities:
Property, plant and equipment	30,229			25,656
Intangible assets	66,529			96,826
Other liabilities	1,217			1,737
Total deferred tax liabilities	97,975			124,219
Net deferred tax liabilities	$	(22,560	)	$	(41,646	)

The Company has approximately $1,258 in United States federal net operating loss carryforwards, all of which are limited by Section 382 of the Internal Revenue Code, with expirations between 2023 and 2027. The Company has approximately $158,252 of foreign net operating loss carryforwards, of which $112,405 may be carried forward indefinitely and $45,847 expire between fiscal 2021 and fiscal 2035. In addition, the Company also has approximately $34,473 of state net operating loss carryforwards with expirations between fiscal 2021 and fiscal 2040.

As of March 31, 2020 and 2019, the federal valuation allowance was $0 and $1,027, respectively. The decrease of $1,027 is due finalized purchase accounting related to the prior year acquisition of Alpha. As of March 31, 2020 and 2019, the valuation allowance associated with the state tax jurisdictions was $896 and $898, respectively. As of March 31, 2020 and 2019, the valuation allowance associated with certain foreign tax jurisdictions was $20,055 and $15,594, respectively. Of the net increase of $4,461, $4,351 was recorded as an increase to tax expense primarily related to deferred tax assets attributable to Swiss tax reform generated in the current year that the Company believes are not more likely than not to be realized. The remaining increase of $110 is primarily related to foreign currency translation adjustments.



	Fiscal year ended March 31,
	2020			2019			2018
United States statutory income tax expense	$	30,857		$	38,264		$	75,196
Increase (decrease) resulting from:
Impact of Tax Act	—			(13,483		)	83,400
State income taxes, net of federal effect	2,764			3,285			3,146
Nondeductible expenses, domestic manufacturing deduction (fiscal 2018) and other	5,953			4,378			2,008
Legal proceedings charge - European Competition Investigations	—			2,405			—
Net effect of GILTI, FDII, BEAT	3,025			2,320			—
Goodwill impairment - See Note 7	10,714			—			—
Effect of foreign operations	(17,605		)	(16,763		)	(35,048		)
Valuation allowance	4,349			2,879			(9,279		)
Switzerland Tax Reform	(26,846		)	—			—
Research and Development Credit	(3,390		)	(1,701		)	(930		)
Income tax expense	$	9,821		$	21,584		$	118,493

The effective income tax rates for the fiscal years ended March 31, 2020, 2019 and 2018 were 6.7%, 11.9% and 49.7%, respectively. The effective income tax rate with respect to any period may be volatile based on the mix of income in the tax jurisdictions in which the Company operates and the amount of its consolidated income before taxes. The rate decrease in fiscal 2020 compared to fiscal 2019 is primarily due to changes in mix of earnings among tax jurisdictions, Swiss tax reform, and items related to the Tax Act in fiscal 2019. The rate decrease in fiscal 2019 compared to fiscal 2018 is primarily due to the impact of the Tax Act, partially offset by increases for additional tax valuation allowances related to certain of our foreign subsidiaries, increases due to non-deductible legal proceedings charge related to the European competition investigation, and changes in the mix of earnings among tax jurisdictions in fiscal 2019.

On May 19, 2019, a public referendum held in Switzerland approved the Federal Act on Tax Reform and AHV (Old-Age and Survivors Insurance) Financing (TRAF) as adopted by the Swiss Federal Parliament on September 28, 2018. The Swiss tax reform measures are effective January 1, 2020. Certain provisions of the TRAF were enacted during the second quarter of fiscal 2020. Significant changes in the tax reform include the abolishment of preferential tax regimes for holding companies, domicile companies and mixed companies at the cantonal level. The transitional provisions of the TRAF allow companies to elect tax basis adjustments to fair value, which is used for tax depreciation and amortization purposes resulting in a deduction over the transitional period. The Company recorded a net deferred tax asset of $22,500 during fiscal 2020, related to the amortizable goodwill.

In fiscal 2020, the foreign effective income tax rate on foreign pre-tax income of $110,744 was (7.4)%. In fiscal 2019, the foreign effective income tax rate on foreign pre-tax income of $128,872 was 12.3% and in fiscal 2018, the foreign effective income tax rate on foreign pre-tax income of $163,886 was 5.2%. The rate decrease in fiscal 2020 compared to fiscal 2019 is primarily due to Swiss tax reform and changes in the mix of earnings among tax jurisdictions. The rate increase in fiscal 2019 compared to fiscal 2018 is primarily due to additional tax valuation allowances related to certain of the Company’s foreign subsidiaries, increases due to non-deductible legal proceedings charge related to the European competition investigation, and changes in the mix of earnings among tax jurisdictions in fiscal 2019.

Income from the Company's Swiss subsidiary comprised a substantial portion of its overall foreign mix of income for the fiscal years ended March 31, 2020, 2019 and 2018 and was taxed, excluding the impact from the Swiss tax reform, at approximately 3%, 4% and 8%, respectively.

The Company has approximately $1,376,000 and $1,167,000 of undistributed earnings of foreign subsidiaries for fiscal years 2020 and 2019, respectively. Since the Company’s undistributed foreign earnings and outside basis differences inherent in foreign entities continue to be indefinitely reinvested in foreign operations, no additional income taxes have been provided.



	Fiscal year ended March 31,
	2020			2019			2018
Balance at beginning of year	$	20,165		$	1,568		$	1,450
Increases related to current year tax positions	598			129			397
Increases related to the Alpha acquisition	769			7,840			—
Increases related to prior year tax positions	—			11,463			11
Decreases related to prior tax positions	(11,463		)	(544		)	—
Decreases related to prior year tax positions settled	—			(93		)	(1		)
Lapse of statute of limitations	(2,274		)	(198		)	(289		)
Balance at end of year	$	7,795		$	20,165		$	1,568

The decrease of prior year tax positions during fiscal 2020, are related to items included in the Tax Act. In connection with the Alpha acquisition, the Company finalized purchase accounting during the fiscal year and recorded an unrecognized tax benefit of $769, as well as an indemnification asset of $769 representing the Seller's obligation to indemnify the Company for the outcome of potential contingent liabilities relating to uncertain tax positions.

All of the balance of unrecognized tax benefits at March 31, 2020, if recognized, would be included in the Company’s Consolidated Statements of Income and have a favorable impact on both the Company’s net earnings and effective tax rate.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2009.

While the net effect on total unrecognized tax benefits cannot be reasonably estimated, approximately $1,250 is expected to reverse in fiscal 2021 due to expiration of various statute of limitations.

The Company recognizes tax related interest and penalties in income tax expense in its Consolidated Statements of Income. As of March 31, 2020 and 2019, the Company had an accrual of $285 and $75, respectively, for interest and penalties.