In addition, accounts receivable balances from The Procter & Gamble Company approximated 3% of the
Companys total accounts receivable balance at September 30, 2018 and March 31, 2018. The loss or substantial reduction of the business of this major customer could have a material adverse impact on the Companys results of
operations and cash flows.
7. Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction, various foreign jurisdictions and various state and local jurisdictions where the
statutes of limitations generally range from three to five years. At September 30, 2018, the Company is no longer subject to U.S. federal examinations by tax authorities for years before fiscal 2015. The Company is no longer subject to state
and local examinations by tax authorities for years before fiscal 2014. In foreign jurisdictions, the Company is no longer subject to examinations by tax authorities for years before fiscal 1999.
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax
Act). The Tax Act significantly revises the future ongoing U.S. corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. As the Company has a March 31 fiscal
year-end,
a U.S. statutory federal rate of 21% applies to the fiscal year beginning April 1, 2018. The Tax Act eliminates the domestic manufacturing deduction and implements certain transitional impacts to the
Company.
The changes included in the Tax Act are broad and complex. The final transition impacts of the Tax Act may differ from estimates, possibly
materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in
response to the Tax Act, or any updates or changes to estimates the Company has utilized to calculate the transition impacts, including impacts from changes to current year earnings estimates and foreign exchange rates of foreign subsidiaries. The
Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The Company made an estimate at March 31,
2018 on the impact of the Tax Act. During the second quarter ended September 30, 2018 the Company recorded a provisional discrete net tax benefit of $328 related to an adjustment of the estimated net deferred tax benefit due to the rate change.
The benefits of tax positions are not recorded unless it is more likely than not the tax position would be sustained upon challenge by the appropriate
tax authorities. Tax benefits that are more likely than not to be sustained are measured at the largest amount of benefit that is cumulatively greater than a 50% likelihood of being realized.
As of September 30, 2018 and March 31, 2018, the Company had liabilities of $5,670 and $7,038, respectively, recorded for unrecognized tax benefits
for U.S. federal, state and foreign tax jurisdictions. During the three months ended September 30, 2018 and 2017, the Company recognized $(1,312) and $117, respectively, of interest and penalties in income tax expense in the condensed
consolidated statements of income. During the six months ended September 30, 2018 and 2017, the Company recognized $(1,174) and $62, respectively, of interest and penalties in income tax expense in the condensed consolidated statements of
income. The liability for the gross amount of interest and penalties at September 30, 2018 and March 31, 2018 was $1,724 and $2,641, respectively. The liability for unrecognized tax benefits is classified in other noncurrent liabilities on
the condensed consolidated balance sheets for the portion of the liability where payment of cash is not anticipated within one year of the balance sheet date. During the three and six months ended September 30, 2018, the Company released $3,063
and $3,063, respectively, of reserves, including interest and penalties, related to uncertain tax positions for which the statutes of limitations have lapsed. The Company believes that it is reasonably possible that $1,625 of unrecognized tax
benefits as of September 30, 2018 could be released within the next 12 months due to the lapse of statute of limitations and settlements of certain foreign and domestic income tax matters. The unrecognized tax benefits that, if recognized,
would favorably impact the effective tax rate are $5,118.
8. Risk Management Activities and Financial Instruments
The Company is exposed to market risks, both directly and indirectly, such as currency fluctuations and interest rate movement. To the extent the Company deems
it to be appropriate, derivative instruments and hedging activities are used as a risk management tool to mitigate the potential impact of certain risks, primarily foreign currency exchange risk and interest rate risk.
The Company uses various types of derivative instruments including, but not limited to, forward contracts and swaps. The Company formally assesses,
designates, and documents as a hedge of an underlying exposure each qualifying derivative instrument that will be accounted for as an accounting hedge at inception. Additionally, the Company assesses, both at inception and at least quarterly
thereafter, whether the financial instruments used in the hedging transactions are effective at offsetting changes in either the fair values or cash flows of the underlying exposures.
Interest Rate Risk Management
The Company uses interest
rate swap agreements (the Swaps) to minimize its exposure to interest rate fluctuations on variable rate debt borrowings. Swaps involve the exchange of fixed and variable rate interest payments and do not represent an actual exchange of
the underlying notional amounts between the two parties.
In conjunction with entering into the Credit Agreement (see Note 5), the Company entered into
two spot
non-amortizing
Swaps with a total notional amount of $300,000 to convert variable rate debt to fixed rate debt. These Swaps became effective October 2017, expire in
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