9. Income Taxes:



For financial reporting purposes, income before income taxes includes the following components:





The provision for (benefit from) income taxes consisted of:





Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. 



















Reconciliation between the U.S. Federal statutory income tax rate and our effective rate for income tax is as follows:





At March 31, 2017, certain of our foreign subsidiaries in Brazil, France, Germany, Israel, China, and Japan had tax net operating loss carry forwards totaling approximately $194,400 of which most had no expiration date. There is a greater likelihood of not realizing the future tax benefits of these net operating losses and other deductible temporary differences in Brazil, Israel, and China since these losses and other deductible temporary differences must be used to offset future taxable income of those subsidiaries, which cannot be assured, and are not available to offset taxable income of other subsidiaries located in those countries. Accordingly, we have recorded valuation allowances related to the net deferred tax assets in these jurisdictions. Valuation allowances decreased $(71,583), $(1,173), and $(12,101) during the years ended March 31, 2015, 2016, and 2017, respectively, as a result of changes in the net operating losses of the subsidiaries or as a result of changes in foreign currency exchange rates in the countries mentioned above. 



The decrease in valuation allowance during the year ended March 31, 2017 was also due to the reversal of valuation allowances of $5,530 related to the future utilization of NOLs totaling $15,878 at a Japanese subsidiary. The related tax benefits upon utilization of the Japanese NOLs expire eight years after they are generated, and they are not subject to annual utilization limitations. The realization of tax benefits due to the utilization of these NOLs could take an extended period of time to realize and are dependent upon the Japanese subsidiary’s continuing profitability, and some could expire prior to utilization.

The decrease in valuation allowance during the year ended March 31, 2015 was also due to the reversal of valuation allowances of $49,969 related to the future utilization of NOLs totaling $149,922 at a French subsidiary. The related tax benefits upon utilization of the French NOLs do not expire; however, they are subject to annual utilization limitations. The realization of tax benefits due to the utilization of these NOLs could take an extended period of time to realize and are dependent upon the French subsidiary’s continuing profitability.



Currently, we expect that cash and profits generated by our foreign subsidiaries will continue to be reinvested indefinitely.  We do not provide for U.S. taxes on the undistributed earnings of foreign subsidiaries which are considered to be reinvested indefinitely.  Total undistributed earnings which would be subject to U.S. income tax if remitted were approximately $993,000 and $1,035,000 as of March 31, 2016 and 2017, respectively. The amount of U.S. taxes on such undistributed earnings as of March 31, 2016 and 2017 would have been $176,491 and $201,802 respectively.



Income taxes paid totaled $56,389,  $22,919 and $55,642 during the years ended March 31, 2015, 2016 and 2017, respectively.



We do not expect that the balances with respect to our uncertain tax positions will significantly increase or decrease within the next 12 months.  For our more significant locations, we are subject to income tax examinations for the tax years 2013 and forward in the United States, 2013 and forward in Germany, 2011 and forward in Hong Kong, and 2011 and forward in the United Kingdom.



A reconciliation of the beginning and ending balance for liabilities associated with uncertain tax positions is as follows:





We recognize interest and penalties related to uncertain tax positions in interest expense.  As of March 31, 2016 and 2017, we had accrued interest related to uncertain tax positions of $535 and $340, respectively. During the year ended March 31, 2016 and 2017, we recognized a $(708) reduction in interest expense and a $(195) reduction in interest expense, respectively, due to the expirations of statutory periods. 



The amount of unrecognized tax benefits recorded on our balance sheet that, if recognized, would affect the effective tax rate is approximately $3,399 and $1,937 at March 31, 2016 and 2017, respectively. This amount excludes the accrual for estimated interest discussed above.