13.

Income taxes:

Income before taxes was taxed as indicated in the following jurisdictions:


	Fiscal Year Ended June 30,
(in thousands)	2013		2012		2011
U.S./Canada	$	109,131	$	124,860	$	118,599
International		124,674		112,331		91,013
Total income tax before taxes	$	233,805	$	237,191	$	209,612

The components of income tax expense were as follows:


	Fiscal Year Ended June 30,
(in thousands)	2013			2012			2011
Current:
Federal	$	33,032		$	46,991		$	45,319
State		2,896			4,153			6,099
Foreign		28,732			22,382			22,160
Total current income tax expense		64,660			73,526			73,578
Deferred:
Federal		(688	)		(2,650	)		(5,603	)
State		(60	)		(235	)		(492	)
Foreign		(1,954	)		(551	)		(2,484	)
Total deferred income tax expense		(2,702	)		(3,436	)		(8,579	)
Total income tax expense	$	61,958		$	70,090		$	64,999

The total tax provision is different from the amount that would have been recorded by applying the U.S. statutory federal income tax rate to income before taxes. The reconciliation of these differences is as follows:


	Fiscal Year Ended June 30,
	2013			2012			2011
Statutory rate		35.0	%		35.0	%		35.0	%
Increase (decrease) resulting from:
State taxes, net of federal tax benefit		1.4			1.6			1.7
Effect of tax rates in foreign jurisdictions		(14.7	)		(11.4	)		(11.0	)
Share-based and other compensation		0.5			1.4			1.4
Non-deferred foreign income		0.2			0.3			0.4
Domestic manufacturing deduction		(1.0	)		(1.0	)		(1.0	)
Valuation allowances		0.5			0.3			1.5
Net uncertain tax positions		0.3			1.4			3.1
Foreign withholding taxes		1.0			0.8			0.7
Non-deductible amortization		1.9			0.0			0.0
Other differences		1.4			1.1			(0.8	)
Effective tax rate		26.5	%		29.5	%		31.0	%

The Company's cumulative unremitted foreign earnings were approximately $864 million, $751 million and $670 million for fiscal years 2013, 2012 and 2011, respectively. The Company currently has no plans to repatriate to the U.S. its cumulative unremitted foreign earnings, as it intends to permanently reinvest such earnings internationally. If the Company changes its strategy in the future and repatriates such funds, the amount of any taxes, which could be significant, and the application of any tax credits, would be determined based on the appropriate jurisdictional income tax laws at the time of such repatriation. Due to the extent of uncertainty as to which remittance structure would be used should a decision be made in the future to repatriate, the availability and the complexity of calculating foreign tax credits, and the implications of indirect taxes, including withholding taxes, determination of the unrecognized deferred income tax liability related to these unremitted earnings is not practicable.

The Company operates in various non-U.S. tax jurisdictions where "tax holiday" income tax incentives have been granted for a specified period. These tax benefits are not material to the Company's consolidated financial statements. Deferred income 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. The significant components of the Company's deferred tax assets and liabilities were as follows:


	As of June 30,
(in thousands)	2013			2012
Deferred tax assets:
Share-based compensation	$	25,712		$	20,177
Net operating loss carryforwards		60,027			59,034
Accruals		11,571			13,207
Accounts receivable reserves		6,795			7,574
Capital losses		4,008			5,338
Intercompany profit eliminations		3,545			2,962
Deferred revenues and customer deposits		580			673
Inventory		2,760			3,113
Benefit related accruals		2,552			2,330
Other		2,194			3,156
Total deferred tax assets		119,744			117,564

Deferred tax liabilities:
Intangible assets amortization		(28,249	)		(26,724	)
Capitalized software development costs		(2,365	)		(2,748	)
Depreciation		(1,246	)		(831	)
Other		(549	)		(1,082	)
Total deferred tax liabilities		(32,409	)		(31,385	)

Valuation allowance:
Capital losses		(4,008	)		0
Auction rate securities		0			(5,338	)
Net operating losses		(17,734	)		(15,619	)
Other		(2,939	)		(2,690	)
Total valuation allowance		(24,681	)		(23,647	)
Net deferred tax assets	$	62,654		$	62,532

The tax affected net operating loss carryforwards and related valuation allowance are as follows:


	As of June 30,
(in thousands)	2013			2012
Net operating loss carryforwards:
U.S./Canada	$	2,861		$	3,958
International		57,166			55,076
Total net operating loss carryforwards		60,027			59,034
Net operating loss carryforward valuation allowance:
U.S./Canada		(42	)		(939	)
International		(17,692	)		(14,680	)
Total net operating loss carryforward valuation allowance		(17,734	)		(15,619	)
Net operating loss carryforwards, net of valuation allowance	$	42,293		$	43,415

The Company is profitable on a consolidated basis. However, it has incurred losses in certain jurisdictions. A valuation allowance has been provided at June 30, 2013 and 2012 to offset the related deferred tax assets in these jurisdictions due to uncertainty of realizing the benefit of the net operating loss carryforwards and other deferred tax assets.

The Company's net operating loss carryforwards and tax credit carryforwards as of June 30, 2013 expire as follows:


	Expires in Fiscal Year Ending June 30,
(in thousands)	2014		2015		Thereafter			No Expiration			Total
U.S./Canada:
Net operating loss carryforwards	$	0	$	0	$	2,861		$	0		$	2,861
Valuation allowances		0		0		(42	)		0			(42	)
Total U.S.		0		0		2,819			0			2,819
International:
Net operating loss carryforwards		0		0		2,518			54,648			57,166
Valuation allowances		0		0		(2,398	)		(15,294	)		(17,692	)
Total International		0		0		120			39,354			39,474
Net operating loss carryforwards,
net of valuation allowances	$	0	$	0	$	2,939		$	39,354		$	42,293

In the ordinary course of the Company's business, transactions occur for which the ultimate tax outcome may be uncertain. Under applicable accounting guidance, the Company is unable to recognize the effects of a tax position in its financial statements unless the position satisfies a minimum recognition threshold mandated by the guidance. The Company's net unrecognized income tax benefits were approximately $35.1 million and $34.7 million, including interest and penalties of approximately $2.7 million and $3.2 million, at June 30, 2013 and 2012, respectively. The Company has recognized approximately $0.5 million of interest benefit and approximately $0.6 million of interest expense for the fiscal years ending June 30, 2013 and 2012, respectively. The interest and penalties related to unrecognized income tax benefits are classified as a component of income tax expense. Components of the previously unrecognized income tax benefits were recorded as non-current to the extent that the Company does not anticipate making a payment within 12 months of the balance sheet date. To the extent ultimately recognized, the previously unrecognized income tax benefit would be recognized as a reduction of income tax expense, impacting the effective income tax rate. The Company has recognized a net increase in income tax expenses with respect to previously unrecognized tax benefits, including interest and penalties for the fiscal year ended June 30, 2013, which includes a reduction in the effective tax rate of 4.5% and income tax expense by approximately $10.6 million, primarily due to settlements with tax authorities and the expiration of statutes of limitations.

Tax authorities periodically audit the Company's income tax returns. These audits include examination of the Company's significant tax filing positions, including the timing and amounts of deductions and the allocation of income and expenses among tax jurisdictions. The Company files income tax returns with tax authorities in the U.S. as well as with various foreign tax jurisdictions. The Company currently considers its major taxing jurisdictions to include the U.S., the United Kingdom, Germany and Ireland.

The Company's income tax returns are no longer subject to examination by the U.S. tax authorities for tax years ending before June 2011, by the U.K. tax authorities for tax years ending before June 2010, the German tax authorities for tax years ending before June 2006 and the Irish tax authorities for tax years ending before June 2009. Certain periods prior to these dates, however, could typically be subject to adjustment due to the impact of items such as competent authority or carryback or carryforward claims.

The Company estimates that within the next 12 months, it will decrease unrecognized income tax benefits, including interest and penalties by between approximately $2.8 million to $4.8 million due to the expiration of statutes of limitations and settlement of issues with tax authorities, which would increase earnings as a result of a reduction in tax expense. However, audit outcomes and the timing of audit settlements are subject to significant uncertainty. Over the next 12 months, it is reasonably possible that the Company will continue to generate liabilities for uncertain tax positions. The statute of limitations associated with our significant tax jurisdictions generally expires with respect to a particular tax year in the Company's third fiscal quarter.

The significant components of the Company's gross unrecognized tax benefits are as follows:


	As of June 30,
(in thousands)	2013			2012
Balance, beginning of year	$	32,079		$	30,013
Current year uncertain tax positions:
Gross increases		9,404			8,183
Prior year uncertain tax positions:
Gross increases		1,025			229
Gross decreases		(471	)		(1,337	)
Settlements with tax authorities		(5,993	)		0
Expiration of statute of limitations		(2,973	)		(5,009	)
Balance, end of year	$	33,071		$	32,079