Income Taxes

The provision for income taxes consists of the following:



(In thousands)	April 1, 2017			April 2, 2016		March 28, 2015
Federal:
Current	$	(19,097	)	$	21,366	$	61,308
Deferred	64,158			42,146		17,121
	45,061			63,512		78,429
State:
Current	(938		)	2,447		3,330
Deferred	3,093			1,781		1,803
	2,155			4,228		5,133
Foreign:
Current	21,121			18,016		9,433
Deferred	231			202		(1,135		)
	21,352			18,218		8,298
Total	$	68,568		$	85,958	$	91,860

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



(In thousands)	April 1, 2017		April 2, 2016		March 28, 2015
Domestic	$	41,031	$	37,568	$	110,881
Foreign	650,049		599,257		629,195
Income before income taxes	$	691,080	$	636,825	$	740,076

As a result of the early adoption of new authoritative guidance on accounting for share-based payments in the first quarter of fiscal 2017, the Company recorded excess tax benefits associated with stock-based compensation of $15.4 million in the provision for income taxes during fiscal 2017. The excess tax benefits associated with stock-based compensation that were recorded in additional paid-in capital in prior fiscal years, were $11.4 million and $13.9 million, for fiscal 2016 and 2015, respectively.

As of April 1, 2017, the Company had federal and state net operating loss carryforwards of approximately $15.9 million. If unused, these carryforwards will expire at various dates through fiscal 2031. 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 $4.6 million of low income housing tax credit carryforwards with expiration in fiscal 2037. The Company had state research tax credit carryforwards of approximately $164.5 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 $111.6 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 $3.46 billion as of April 1, 2017. The residual U.S. tax liability, if such amounts were remitted, would be approximately $1.17 billion.

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)	April 1, 2017			April 2, 2016			March 28, 2015
Income before provision for taxes	$	691,080		$	636,825		$	740,076
Federal statutory tax rate	35		%	35		%	35		%
Computed expected tax	241,878			222,889			259,027
State taxes, net of federal benefit	1,741			3,177			2,458
Foreign earnings at lower tax rates	(119,616		)	(112,942		)	(141,372		)
Tax credits	(34,146		)	(25,211		)	(26,633		)
Excess benefits from stock-based compensation	(15,396		)	—			—
Other	(5,893		)	(1,955		)	(1,620		)
Provision for income taxes	$	68,568		$	85,958		$	91,860

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 percent. The benefits of Pioneer Status in Singapore for fiscal 2017, fiscal 2016 and fiscal 2015 were approximately $55.9 million ($0.21 per diluted share), $51.3 million ($0.19 per diluted share), and $66.0 million ($0.24 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 April 1, 2017 and April 2, 2016:



(In thousands)	2017			2016
Deferred tax assets:
Stock-based compensation	$	22,050		$	22,128
Deferred income on shipments to distributors	8,167			9,307
Accrued expenses	9,567			32,771
Tax credit carryforwards	109,681			95,424
Deferred compensation plan	32,518			27,412
Low income housing and other investments	8,163			8,265
Other	17,628			11,538
Subtotal	207,774			206,845
Valuation allowance	(72,520		)	(62,179		)
Total deferred tax assets	135,254			144,666
Deferred tax liabilities:
Unremitted foreign earnings	(383,312		)	(335,522		)
Convertible debt	(1,573		)	(2,349		)
Other	(4,002		)	(1,699		)
Total deferred tax liabilities	(388,887		)	(339,570		)
Total net deferred tax liabilities	$	(253,633	)	$	(194,904	)

Long-term deferred tax assets of $64.4 million and $66.6 million as of April 1, 2017 and April 2, 2016, respectively, were included in other assets on the consolidated balance sheet.

As of April 1, 2017 and April 2, 2016, gross deferred tax assets were offset by valuation allowances of $72.5 million and $62.2 million, respectively, which were associated with state tax credit carryforwards.

The aggregate changes in the balance of gross unrecognized tax benefits for fiscal 2017 and 2016 were as follows:



(In thousands)	2017			2016
Balance as of beginning of fiscal year	$	33,999		$	30,089
Increases in tax positions for prior years	—			786
Decreases in tax positions for prior years	(10,078		)	(606		)
Increases in tax positions for current year	6,556			4,757
Settlements	—			(85		)
Lapses in statutes of limitation	(40		)	(942		)
Balance as of end of fiscal year	$	30,437		$	33,999

If the remaining balance of $30.4 million and $34.0 million of unrecognized tax benefits as of April 1, 2017 and April 2, 2016, respectively, were realized in a future period, it would result in a tax benefit of $8.5 million and $15.3 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, U.S. state audits for years through fiscal 2010 and tax audits in Ireland for years through fiscal 2012.

The Company had been subject to examination by the IRS for fiscal 2012 through 2014. During the fourth quarter of fiscal 2016, the IRS completed its fieldwork and the case was forwarded to the Joint Committee on Taxation for review. On July 29, 2016, the Company received written notification that the Joint Committee had completed its review and had taken no exception to the conclusions reached by the IRS.

The Company believes its provision for unrecognized tax benefits is adequate for adjustments that may result from tax audits. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company's tax audits are resolved in a manner not consistent with management's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. It is reasonably possible that changes to the Company's 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 audits and their possible outcomes, an estimate of the range of increase or decrease that could occur in the next twelve months cannot be made at this time.