14. Income taxes:

The components of income before income tax expense were:

(In thousands)

Years ended March 31,	2012		2011		2010
United States	$	325,882	$	330,511	$	386,214
Foreign		911,806		1,007,225		564,472
Income before income tax expense	$	1,237,688	$	1,337,736	$	950,686

The provision for income taxes consists of the following:

(In thousands)

Years ended March 31,	2012			2011		2010
Current:
U.S. federal	$	222,012		$	162,020	$	227,181
State and local		26,984			23,574		19,905
Foreign		52,452			56,866		43,558
		301,448			242,460		290,644
Deferred:
United States		( 41,970	)		45,997		( 23,216	)
Foreign		( 848	)		2,509		875
		( 42,818	)		48,506		( 22,341	)
	$	258,630		$	290,966	$	268,303

The reasons for the difference between the provision for income taxes and expected federal income taxes at statutory rates are as follows:

Years ended March 31, (percentage of income before income tax expense)	2012			2011			2010
U.S. statutory rate		35.0	%		35.0	%		35.0	%
Effect of foreign operations		(16.1	)		(17.9	)		(11.3	)
Research credit		( 1.0	)		( 1.0	)		( 1.1	)
State and local taxes, less federal tax benefit		1.4			1.1			1.4
Government investigation		0.0			2.1			0.0
Permanent differences and other items		1.6			2.5			4.2
		20.9	%		21.8	%		28.2	%

The Company's effective tax rate for fiscal years 2012, 2011 and 2010 is lower than the federal statutory rate principally as a result of the proportion of earnings generated in lower-taxed foreign jurisdictions as compared with the United States.

Net deferred income taxes relate to the following timing differences:

(In thousands)

March 31,	2012			2011
Inventory reserves	$	42,121		$	45,149
Receivable allowances and other reserves		33,912			40,776
Property, plant and equipment		( 12,759	)		( 12,557	)
Intangible assets		( 278,853	)		76,189
Carryforwards and credits		57,740			57,969
Accrued liabilities		56,821			38,631
Employee stock option tax benefits		39,953			23,196
Other (includes reserve for legal contingencies)		29,398			32,970
		( 31,667	)		302,323
Valuation allowance		( 11,875	)		( 13,551	)
Deferred taxes, net	$	( 43,542	)	$	288,772

The Company has certain state and local net operating loss carryforwards as well as excess charitable contribution carryovers which are available to reduce future U.S. federal and state taxable income, expiring at various times between 2012 and 2028. Although not material, valuation allowances have been established for a portion of deferred tax assets acquired as part of the Cerexa purchase as the Company determined that it was more likely than not that these benefits will not be realized.

At March 31, 2012, U.S. taxes have not been provided on approximately $6.4 billion of undistributed earnings of foreign subsidiaries as these undistributed earnings are indefinitely reinvested offshore. If, in the future, these earnings are repatriated to the U.S., or if such earnings are expected to be remitted in the foreseeable future, additional tax provisions would be required. Due to complexities in the tax laws and the assumptions that would have to be made, it is not practicable to estimate the amounts of income taxes that would have to be provided.

The Company accrues liabilities for identified tax contingencies that result from positions that are being challenged or could be challenged by tax authorities. The Company believes that its accrual for tax liabilities is adequate for all open years, based on Management's assessment of many factors, including its interpretations of the tax law and judgments about potential actions by tax authorities. However, it is possible that the ultimate resolution of any tax audit may be materially greater or lower than the amount accrued.

The Company's income tax returns for fiscal years prior to 1999 in most jurisdictions and prior to 2006 in Ireland are no longer subject to review as such fiscal years are generally closed. Tax authorities in various jurisdictions are in the process of reviewing the Company's income tax returns for various post-1999 fiscal years, including the Internal Revenue Service, which is currently reviewing fiscal years 2004, 2005 and 2006. It is unlikely that the outcome will be determined within the next 12 months. Potential claims for years under review could be material.

As of March 31, 2012 the Company's Consolidated Balance Sheet reflects unrecognized tax benefits (UTBs) of $498.3 million of which $469.3 million would impact the effective tax rate if recognized. A reconciliation of the beginning and ending amount of UTBs is as follows:

(In thousands)	2012			2011
Balance at beginning of period	$	426,398		$	312,408
Additions related to prior year positions		5,406			14,349
Reductions related to prior year positions		( 874	)		0
Reduction related to audit settlement		( 13,177	)		0
Reduction related to statute expiration		( 6,530	)		0
Additions related to current year positions		87,069			99,641
Balance as of March 31	$	498,292		$	426,398

The Company recorded interest related to UTBs in income tax expense and related liability accounts on the balance sheet. During the fiscal years ended March 31, 2012 and 2011, the Company recognized $12.8 million and $17.7 million of interest and penalties, respectively. Accrued interest related to UTBs totaled $72.1 million and $59.3 million as of March 31, 2012 and 2011, respectively.

It is anticipated that the amount of UTBs will not change significantly within the next 12 months.