v3.26.1
PROVISION FOR INCOME TAXES
 12 Months Ended
Mar. 31, 2026
Income Tax Disclosure [Abstract]  
PROVISION FOR INCOME TAXES PROVISION FOR INCOME TAXES
Income (loss) before income taxes is as follows: 
Year Ended March 31,
202620252024
Income (loss) before income taxes
United States$(366,906)$(396,542)$(17,201)
Foreign166,230 191,780 279,275 
Total$(200,676)$(204,762)$262,074 

The components of the income tax expense (benefit) consisted of the following: 
Year Ended March 31,
202620252024
Current
Federal$5,551 $15,267 $19,909 
State2,629 1,665 4,062 
Foreign43,208 41,972 29,728 
51,388 58,904 53,699 
Deferred
Federal250,373 (52,055)(22,361)
State185 (952)90 
Foreign(7,194)(8,787)(1,422)
243,364 (61,794)(23,693)
Income tax expense (benefit)$294,752 $(2,890)$30,006 

Cash paid for income taxes, net of refunds received, by jurisdiction is as follows:
Year Ended
March 31, 2026
Federal$(11,196)
State1,356 
Foreign
Hong Kong16,877 
Mexico10,119 
Netherlands6,836 
Canada6,110 
China3,250 
United Kingdom2,969 
Other5,549 
Cash paid for income taxes, net of refunds received$41,870 
A reconciliation of the U.S. statutory federal income tax rate to the effective income tax rate, reflecting the adoption of ASU 2023-09, is as follows:
Year Ended
March 31, 2026
U.S. federal statutory income tax rate(42,142)21.0 %
State and local taxes, net of federal tax impact(1)
2,088 (1.0)%
Foreign tax effects
Hong Kong
Statutory tax rate differential(5,206)2.6 %
Income excluded from Hong Kong base(6,617)3.3 %
Other3,647 (1.8)%
China
Changes in valuation allowances(22,647)11.3 %
Deferred tax adjustments5,013 (2.5)%
Other2,551 (1.3)%
Canada
Withholding taxes4,174 (2.1)%
Other594 (0.3)%
Cyprus
Changes in valuation allowances16,377 (8.2)%
Deferred tax adjustments(7,140)3.6 %
Other(258)0.1 %
Panama
Statutory tax rate differential(2,377)1.2 %
Netherlands3,262 (1.6)%
Other foreign jurisdictions3,323 (1.7)%
Effect of cross-border tax laws
U.S. GILTI Inclusion, net of foreign tax credits(23,514)11.7 %
Foreign tax credits on withholding taxes(3,992)2.0 %
Tax credits
Federal R&D tax credit(3,668)1.8 %
Federal Energy tax credits(5,553)2.8 %
Changes in valuation allowances355,520 (177.2)%
Nontaxable or nondeductible items
Executive Compensation3,346 (1.7)%
Other3,230 (1.6)%
Changes in unrecognized tax benefits14,691 (7.3)%
Other adjustments50 — %
Effective income tax rate$294,752 (146.9)%

(1) State taxes in Texas, Maryland and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category.
The following table provides the corresponding rate reconciliation information for periods prior to the adoption of ASU 2023-09 and is provided for comparative purposes only.
Year Ended March 31,
 
2025
2024
U.S. federal statutory income tax rate
$(43,000)
21.0 
%
$55,036 
21.0 
%
State taxes, net of federal tax impact
(17,156)
8.4 
%
3,342 
1.3 
%
Effect of foreign earnings
7,772 
(3.8)
%
(10,975)
(4.2)
%
U.S. GILTI Inclusion
28,164 
(13.8)
%
6,041 
2.3 
%
Permanent tax (benefits)/nondeductible expenses
(3,422)
1.7 
%
(11,623)
(4.4)
%
Unrecognized tax benefits
14,138 
(6.9)
%
7,781 
3.0 
%
International intangible asset
— 
— 
%
(113,688)
(43.6)
%
Valuation allowance
17,175 
(8.4)
%
102,669 
39.2 
%
Federal R&D credit
(3,000)
1.5 
%
(3,000)
(1.1)
%
Other
(3,561)
1.7 
%
(5,577)
(2.1)
%
Effective income tax rate
$(2,890)
1.4 
%
$30,006 
11.4 
%

For Fiscal 2026, the Company recorded an income tax expense of $294.8 million compared to an income tax benefit of $2.9 million for Fiscal 2025, and income tax expense of $30.0 million for Fiscal 2024.
In Fiscal 2026, the Company recorded income tax expense related to valuation allowances against previously recognized U.S. federal deferred tax assets and against fiscal year losses incurred in the United States and Cyprus, which was partially offset by the release of valuation allowances against China deferred tax assets and a United States federal provision to return benefit resulting from an approved IRS method change.
In Fiscal 2025, the Company recorded an income tax benefit related to pre-tax losses, which was offset by the impact of the U.S. GILTI inclusion and valuation allowances on U.S. state tax benefits derived from those losses. In Fiscal 2024, the Company recorded an income tax benefit for the recognition of a deferred tax asset related to an international intangible asset with an associated valuation allowance.
Deferred tax assets and liabilities consisted of the following: 
As of March 31, 2026As of March 31, 2025
Deferred tax assets
Operating lease liabilities$166,847 $170,221 
Property and equipment166,738 30,270 
Intangible assets153,088 125,186 
Capitalized research expenditures67,140 65,872 
Inventory56,306 28,629 
Foreign net operating loss carry-forwards54,047 37,377 
Reserves and accrued liabilities36,253 45,715 
U.S. federal and state net operating loss26,724 68,155 
U.S. federal and state tax credits12,815 8,050 
Foreign tax credits10,554 6,493 
Allowance for doubtful accounts and sales return reserves10,541 13,063 
Stock-based compensation9,784 13,312 
Foreign currency derivatives9,321 4,429 
Deductions limited by income1,329 16,273 
U.S. federal and state capital loss— 32,652 
Other5,478 5,171 
Total deferred tax assets786,965 670,868 
Less: valuation allowance(644,390)(292,362)
Total net deferred tax assets$142,575 $378,506 
Deferred tax liabilities
Right-of-use asset$(87,616)$(90,424)
Prepaid expenses(1,307)(1,455)
Other(2,034)(1,189)
Total deferred tax liabilities(90,957)(93,068)
Total deferred tax assets, net$51,618 $285,438 

All deferred tax assets and liabilities are classified as non-current on the Consolidated Balance Sheets as of March 31, 2026 and March 31, 2025. Topic 740 requires an evidence based approach when assessing the realizability of deferred tax assets and the need for valuation allowance reserves against those assets. Assessing whether deferred tax assets are realizable requires significant judgment. On a quarterly basis, the Company considers all available positive and negative evidence, including historical operating performance and expectations of future operating performance when assessing the need for a valuation allowance. The ultimate realization of deferred tax assets is often dependent upon future taxable income and therefore can be uncertain. Topic 740 requires that if the weight of negative evidence is greater than positive evidence, a valuation allowance should be established, which increases income tax expense in the period when such a determination is made.
As previously disclosed, the Company has been actively monitoring potential detrimental impacts to the realizability of its U.S. federal deferred tax assets, including continued pressure of tariffs and pressure from the current global trade environment on forecasted short-term U.S. profitability. During Fiscal 2026, the Company expanded the 2025 restructuring plan and incurred additional litigation reserve expense related to the previously disclosed insurance carrier litigation described in Note 8. These recent developments have caused the negative evidence to outweigh the positive evidence, and therefore, in accordance with Topic 740, the Company has recorded valuation allowances on all U.S. federal deferred tax assets as of March 31, 2026.
As of March 31, 2026, for the majority of the U.S. states and certain foreign taxing jurisdictions, the weight of the negative evidence continues to outweigh the positive evidence regarding the realization of these deferred tax assets and the Company has maintained valuation allowances against these assets.
As of March 31, 2026, the Company achieved three-year cumulative taxable earnings in China. As a result of this significant positive evidence, the Company has released the valuation allowances recorded against its deferred tax assets in China.
As of March 31, 2026, the Company had $26.7 million in net deferred tax assets associated with $383.6 million in U.S. federal and state net operating loss carryforwards and $12.8 million in net deferred tax assets associated with U.S. federal and state tax credits. Certain definite lived state net operating losses and state tax credits will begin to expire within five to twenty years. The Company previously had U.S. federal and state capital loss carryforwards with an associated full valuation allowance, which have expired as of March 31, 2026. The Company is not able to forecast the utilization of the deferred tax assets associated with the majority of state net operating loss carryforwards, and a majority of the deferred tax assets associated with state tax credits and has recorded a valuation allowance of $39.4 million against these deferred tax assets.
As of March 31, 2026, the Company had $54.0 million in net deferred tax assets associated with approximately $304.1 million in foreign net operating loss carryforwards and $10.6 million in deferred tax assets associated with foreign tax credit carryforwards. While a portion of the foreign net operating loss carryforwards and foreign tax credit carryforwards have an indefinite carryforward period, certain are definite lived, expected to expire within two to fifteen years. At this time, the Company is not able to forecast the utilization of a majority of the deferred tax assets associated with foreign net operating loss carryforwards and foreign tax credit carryforwards and has recorded a valuation allowance of $59.7 million against these foreign deferred tax assets as well as a valuation allowance of $136.4 million against certain other foreign deferred tax assets.
As of March 31, 2026, the Company has accumulated undistributed earnings of approximately $965.5 million generated by foreign subsidiaries including $399.4 million amount of undistributed earnings which will continue to be indefinitely reinvested to fund international growth and operations. The Company has recorded all applicable taxes on the undistributed earnings of its foreign subsidiaries that are not indefinitely reinvested through March 31, 2026. The remainder of the Company's foreign earnings, which are indefinitely reinvested, have been previously subject to U.S. federal tax; additional taxes including currency gains or losses, capital gains, foreign withholding taxes, and U.S. state taxes, are not expected to be material.
The following table represents a reconciliation of the Company's total unrecognized tax benefits balances, excluding interest and penalties.
Year Ended March 31,
202620252024
Beginning of period$72,939 $64,932 $61,945 
Increases as a result of tax positions taken in a prior period15,688 6,491 5,909 
Decreases as a result of tax positions taken in a prior period— — (2,921)
Increases as a result of tax positions taken during the current period910 2,787 855 
Decreases as a result of settlements during the current period(1,400)(1,169)— 
Decreases as a result of a lapse of limitations during the current period(586)(102)(856)
End of period$87,551 $72,939 $64,932 
As of March 31, 2026, the total liability for unrecognized tax benefits was approximately $110.8 million (March 31, 2025: $95.1 million) including $23.3 million for the accrual of interest and penalties (March 31, 2025: $22.1 million).
For Fiscal 2026, the Company recorded $1.1 million for the accrual of interest and penalties within the provision for income taxes on its Consolidated Statements of Operations (Fiscal 2025: $7.1 million; Fiscal 2024: $6.6 million).
As of March 31, 2026, $81.0 million of unrecognized tax benefits, excluding interest and penalties, would impact the Company's effective tax rate if recognized. Also included in the balance are unrecognized tax benefits of $6.5 million that, if recognized, would result in adjustments to other tax accounts, primarily valuation allowances on deferred tax assets.
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is currently under audit by the U.S. Internal Revenue Service for the years 2015 through 2020. The majority of the Company's other returns for years before 2014 are no longer subject to U.S. federal, state and local or foreign income tax examinations by tax authorities.
The total amount of unrecognized tax benefits relating to the Company's tax positions is subject to change based on future events including, but not limited to, the settlements of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. Although the outcomes and timing of such events are highly uncertain, the Company does not anticipate that the balance of gross unrecognized tax benefits, excluding interest and penalties, will change significantly during the next twelve months. However, changes in the occurrence, expected outcomes, and timing of such events could cause the Company's current estimate to change materially in the future.