Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Mar. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income taxes included in the consolidated income statement consisted of the following:
Year Ended March 31, 2024 Year Ended March 31, 2023 Year Ended March 31, 2022
Current provision:
Federal provision $ 5,643  $ 6,329  $ 634 
Foreign provision 11,315  12,619  8,907 
State provision 1,207  1,181  441 
Deferred provision:
Federal deferred benefit (329) (2,648) (231)
Foreign deferred benefit (1,626) (1,649) (1,396)
State deferred benefit (124) (265) (22)
Total provision for income taxes $ 16,086  $ 15,567  $ 8,333 
    Deferred income tax assets and liabilities were as follows:
March 31,
2024 2023
Deferred tax assets:
Accrued liabilities and reserves $ 7,776  $ 6,868 
Capitalized research and development costs 2,869  1,747 
Foreign deferred benefits 1,326  1,250 
Stock option compensation 899  802 
Net operating loss carryforward 441  453 
Inventories 773  584 
Capitalized transaction costs 431  124 
Tax credit carryforward 218  225 
Unrealized gain on hedge 25  8 
Valuation allowance (201) (238)
Total deferred tax assets $ 14,557  $ 11,823 
Deferred tax liabilities:
Intangible assets $ (5,916) $ (5,798)
Intangible and other - foreign (10,121) (11,728)
Property, plant and equipment (5,994) (4,813)
Prepaid expenses (281) (247)
Unrealized loss on hedge —  — 
Undistributed foreign earnings (610) (632)
Total deferred tax liabilities $ (22,922) $ (23,218)
Net deferred tax liability $ (8,365) $ (11,395)
The Company expects that it is more likely than not that the results of future operations will generate sufficient taxable income to realize its domestic and foreign deferred tax assets, net of valuation allowance reserves.
    The U.S. and non-U.S. components of income (loss) from continuing operations before income taxes were as follows:
Year Ended March 31, 2024 Year Ended March 31, 2023 Year Ended March 31, 2022
U.S. $ 28,065  $ 17,792  $ 4,240 
Non-U.S. 39,609  31,441  24,185 
Income from continuing operations $ 67,674  $ 49,233  $ 28,425 
The difference between the provision for income taxes and the amount that would result from applying the U.S. statutory tax rate to income before provision for income taxes is as follows:
Year Ended March 31, 2024 Year Ended March 31, 2023 Year Ended March 31, 2022
Notional U.S. federal income tax expense at statutory rate $ 14,252  $ 10,339  $ 5,969 
Adjustments to reconcile to the income tax provision:
Impact of U.S. global intangible taxes and benefits (560) (622) (210)
Russian loss not benefited 207  2,768  — 
Rate difference-international subsidiaries 482  1,602  1,223 
Withholding on Canadian intercompany dividend —  —  301 
Impact on deferred tax liability for statutory rate change —  —  74 
Undistributed foreign earnings 371  (315) 713 
U.S. state income tax provision, net 912  654  451 
Charges/(benefits) related to uncertain tax positions 84  77  77 
Non-deductible charges 741  421  150 
Change in valuation allowance (37) 10  34 
Other, net (366) 633  (449)
Provision for income taxes $ 16,086  $ 15,567  $ 8,333 
On December 22, 2017, the U.S. enacted significant changes to U.S. tax law following the passage and signing of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for fiscal Year 2018” (the “Tax Act”) (previously known as “The Tax Cuts and Jobs Act”).  The Tax Act included significant changes to existing tax law, including a permanent reduction to the U.S. federal corporate income tax rate from 35% to 21%, a one-time repatriation tax on deferred foreign income (“Transition Tax”), deductions, credits and business-related exclusions. 
    Consistent with provisions allowed under the Tax Act, the net $4,007 calculated Transition Tax liability will be paid over an eight year period beginning in fiscal year 2019. At March 31, 2024, $911 of the Transition Tax liability is included in “Other non-current liabilities” in the consolidated balance sheets.  
Given the Tax Act’s significant changes and the opportunities to repatriate cash tax free, we have reevaluated our current permanent reinvestment position. Accordingly, we no longer assert a permanent reinvestment position in most of our foreign subsidiaries, with the exception of Canada and expect to repatriate certain earnings which will be subject to withholding taxes. At March 31, 2024, we plan to repatriate all future earnings from Canada on a go-forward basis while leaving all historical earnings permanently reinvested. At March 31, 2024 we have accrued $836 as an additional deferred tax liability associated with the future repatriation of earnings from jurisdictions that withhold taxes on foreign paid dividends.  
In connection with the strategic assessment related to our Russian subsidiary, the Company had losses that were primarily not benefited for tax during the year ended March 31, 2023. The net tax impact of the losses for the write-down of the Russian subsidiary was $2,768.
    As of March 31, 2024, the Company had foreign tax net operating loss carry-forwards ("NOLs") of $1,740. Of this amount, $544 may be carried forward indefinitely. As of March 31, 2024, the tax years 2020 through 2023 remain open to examination by the major taxing jurisdictions to which we are subject.
    At March 31, 2024, reserves for uncertain tax position consisted of uncertain tax positions related to the final Transition Tax that we determined could be overturned if the calculations were examined by tax authorities. The reserves for the Transition Tax will remain subject to examination until January 2026. Accordingly, these reserves may be released within the next twelve months. Activity within our reserve for uncertain tax positions as well as the penalties and interest are recorded as a component of the Company's income tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Year Ended March 31, 2024 Year Ended March 31, 2023
Beginning balance $ 962  $ 885 
Release of reserve —  — 
Interest and penalties on prior reserves 84  77 
Reserve for uncertain income taxes - included in "Other non-current liabilities" $ 1,046  $ 962