Income Taxes

The provision for income taxes consists of the following:



(In thousands)	March 28, 2015			March 29, 2014			March 30, 2013
Federal:
Current	$	61,308		$	16,692		$	97,108
Deferred	17,121			48,021			(45,465		)
	78,429			64,713			51,643
State:
Current	3,330			1,333			1,007
Deferred	1,803			5,954			1,742
	5,133			7,287			2,749
Foreign:
Current	9,433			7,264			5,455
Deferred	(1,135		)	(126		)	(377		)
	8,298			7,138			5,078
Total	$	91,860		$	79,138		$	59,470

The domestic and foreign components of income before income taxes were as follows:



(In thousands)	March 28, 2015		March 29, 2014		March 30, 2013
Domestic	$	110,881	$	83,617	$	45,617
Foreign	629,195		625,909		501,389
Income before income taxes	$	740,076	$	709,526	$	547,006

The tax benefits associated with stock-based compensation recorded in additional paid-in capital were $13.9 million, $26.4 million and $9.0 million, for fiscal 2015, 2014 and 2013, respectively.

As of March 28, 2015, the Company had federal and state net operating loss carryforwards of approximately $16.5 million. If unused, these carryforwards will expire at various dates through 2030. All of the federal and state net operating loss carryforwards are subject to change of ownership limitations provided by the Internal Revenue Code and similar state provisions. The Company had state research tax credit carryforwards of approximately $152.4 million. The credits have no expiration date. Some of the state credit carryforwards are subject to change of ownership limitations provided by state provisions similar to that of the Internal Revenue Code. The state credit carryforwards include $80.8 million that is not likely to be recovered and has been reduced by a valuation allowance.

Unremitted foreign earnings that are considered to be permanently invested outside the U.S., and on which no U.S. taxes have been provided, are approximately $2.80 billion as of March 28, 2015. The residual U.S. tax liability, if such amounts were remitted, would be approximately $938.7 million.

The provision for income taxes reconciles to the amount derived by applying the Federal statutory income tax rate to income before provision for taxes as follows:



(In thousands)	March 28, 2015			March 29, 2014			March 30, 2013
Income before provision for taxes	$	740,076		$	709,526		$	547,006
Federal statutory tax rate	35		%	35		%	35		%
Computed expected tax	259,027			248,334			191,452
State taxes, net of federal benefit	2,458			4,664			1,787
Foreign earnings at lower tax rates	(141,372		)	(143,336		)	(107,730		)
Tax credits	(26,633		)	(23,389		)	(26,305		)
Other	(1,620		)	(7,135		)	266
Provision for income taxes	$	91,860		$	79,138		$	59,470

The Company has manufacturing operations in Singapore where the Company has been granted "Pioneer Status" that is effective through fiscal 2021. The Pioneer Status reduces the Company’s tax on the majority of Singapore income from 17% to zero. The benefits of Pioneer Status in Singapore for fiscal 2015, fiscal 2014 and fiscal 2013 were approximately $66.0 million ($0.24 per diluted share), $60.3 million ($0.21 per diluted share), and $41.0 million ($0.15 per diluted share), respectively, on income considered permanently reinvested outside the U.S. The tax effect of operations in low tax jurisdictions on the Company’s overall tax rate is reflected in the table above.

The major components of deferred tax assets and liabilities consisted of the following as of March 28, 2015 and March 29, 2014:



(In thousands)	2015			2014
Deferred tax assets:
Stock-based compensation	$	18,233		$	21,142
Deferred income on shipments to distributors	9,207			8,097
Accrued expenses	28,318			26,864
Tax credit carryforwards	86,650			79,272
Deferred compensation plan	26,079			22,280
Low income housing and other investments	10,247			6,735
Other	10,706			6,685
Subtotal	189,440			171,075
Valuation allowance	(52,552		)	(43,004		)
Total deferred tax assets	136,888			128,071
Deferred tax liabilities:
Unremitted foreign earnings	(280,322		)	(253,231		)
Convertible debt	(3,220		)	(4,670		)
Other	(3,987		)	(5,493		)
Total deferred tax liabilities	(287,529		)	(263,394		)
Total net deferred tax liabilities	$	(150,641	)	$	(135,323	)

Long-term deferred tax assets of $59.7 million and $61.9 million as of March 28, 2015 and March 29, 2014, respectively, were included in other assets on the consolidated balance sheet.

As of March 28, 2015, gross deferred tax assets were offset by valuation allowances of $52.6 million, which were associated with state tax credit carryforwards. As of March 29, 2014, gross deferred tax assets were offset by valuation allowances of $43.0 million, which were associated with state tax credit carryforwards and foreign net operating loss carryforwards.

The aggregate changes in the balance of gross unrecognized tax benefits for fiscal 2015 and 2014 were as follows:



(In thousands)	2015			2014
Balance as of beginning of fiscal year	$	26,398		$	69,957
Increases in tax positions for prior years	97			163
Decreases in tax positions for prior years	(37		)	(35,615		)
Increases in tax positions for current year	4,822			3,687
Settlements	—			(6,030		)
Lapses in statutes of limitation	(1,191		)	(5,764		)
Balance as of end of fiscal year	$	30,089		$	26,398

If the remaining balance of $30.1 million and $26.4 million of unrecognized tax benefits as of March 28, 2015 and March 29, 2014, respectively, were realized in a future period, it would result in a tax benefit of $12.5 million and $11.0 million, respectively, thereby reducing the effective tax rate.

The Company’s policy is to include interest and penalties related to income tax liabilities within the provision for income taxes on the consolidated statements of income. The balances of accrued interest and penalties recorded in the consolidated balance sheets and the amounts of interest and penalties included in the Company’s provisions for income taxes were not material for any period presented.

The Company is no longer subject to U.S. federal audits by taxing authorities for years through fiscal 2011. The Company is no longer subject to U.S. state audits for years through fiscal 2009. The Company is no longer subject to tax audits in Ireland for years through fiscal 2010.

The Company is currently under examination by the IRS for fiscal years 2012 through 2014. The Company believes the allowance for income tax contingencies is adequate and do not anticipate a significant change in the allowance for income tax contingencies as a result of the IRS audit.

It is reasonably possible that changes to our unrecognized tax benefits could be significant in the next twelve months due to tax audit settlements and lapses of statutes of limitation. As a result of uncertainties regarding tax audit settlements and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be made.