Income taxes

12 Months Ended

Mar. 31, 2011

Notes to Financial Statements [Abstract]

13. INCOME TAXES

The Company is subject to income taxes in the U.S. and numerous foreign jurisdictions. The Company files U.S. federal, U.S. state, and foreign income tax returns. For U.S. federal, and in general for U.S. state tax returns, the 2009 through fiscal 2011 tax years remain open for examination by tax authorities. For foreign tax returns, the Company is generally no longer subject to income tax examinations for years prior to fiscal 2004.

Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. Although the Company believes that it has appropriately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different than expectations. The Company will adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, the refinement of an estimate, the closing of a statutory audit period or changes in applicable tax law. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to the reserves that are considered appropriate, as well as related net interest.

The Company recognizes liabilities for anticipated tax audit issues in the U.S. and other domestic and international tax jurisdictions based on its estimate of whether, and the extent to which, additional tax payments are more likely than not. The Company believes it maintains appropriate reserves to offset potential income tax liabilities that may arise upon final resolution of matters for open tax years. The U.S. Internal Revenue Service (IRS) is currently auditing the Company's fiscal years 2009 and 2010. Fiscal 2011 is currently open for examination by the IRS. The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are appropriate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. If such accrued amounts ultimately prove to be unnecessary, the resulting reversal of such reserves would result in tax benefits being recorded in the period the reserves are no longer deemed necessary. If such assessments ultimately prove to be greater than anticipated, a future charge to expense would be recorded in the period in which the assessment is determined. Timing of the resolution and/or closure on audits is highly uncertain; however, the Company does not believe that it is reasonably possible that the unrecognized tax benefits could significantly change within the next 12 months as the result of a tax examination closure.

The following table summarizes the activity related to the Company's gross unrecognized tax benefits from April 1, 2008 to March 31, 2011 (amounts in thousands):

	Year Ended March 31,
	2011			2010			2009
Beginning balance	$	57,140		$	70,051		$	112,311
Increases related to acquisitions		26,843			---			---
Decreases related to prior year tax positions		(48,428	)		(25,492	)		(49,967	)
Increases related to current year tax positions		9,977			11,332			7,584
Increases related to prior year tax positions		379			1,249			123
Ending balance	$	45,911		$	57,140		$	70,051

As of March 31, 2011, the Company had accrued approximately $0.5 million related to the potential payment of interest on the Company's uncertain tax positions. Interest was included in the provision for income taxes. The Company has accrued for approximately $1.0 million in penalties related to its uncertain tax positions related to its international locations.

The income tax (benefit) provision from continuing operations consists of the following (amounts in thousands):

	Year Ended March 31,
	2011			2010			2009
Current (benefit) expense:
Federal	$	294		$	(4,358	)	$	(38,836	)
State		21			(436	)		(3,888	)
Foreign		22,877			6,981			8,689
Total current	$	23,192			2,187			(34,035	)

Deferred expense (benefit):
Federal	$	11,035			16,663			19,476
State		788			1,668			1,950
Foreign		(3,484	)		290			(899	)
Total deferred		8,340			18,621			20,527
	$	31,531		$	20,808		$	(13,508	)

The tax benefit associated with the Company's equity incentive plans reduced taxes currently payable by $7.5 million, $3.7 million and $7.6 million for the years ended March 31, 2011, 2010 and 2009, respectively. These amounts were credited to additional paid-in capital in each of the three fiscal years.

The provision for income taxes differs from the amount computed by applying the statutory federal tax rate to income before income taxes. The sources and tax effects of the differences in the total income tax (benefit) provision from continuing operations are as follows (amounts in thousands):

	Year Ended March 31,
	2011			2010			2009
Computed expected income tax provision	$	161,244		$	83,235		$	81,228
State income taxes, net of federal benefits		1,746			915			1,295
Research and development tax credits		(3,691	)		(1,500	)		(2,732	)
Foreign income taxed at lower than the federal rate		(103,373	)		(53,390	)		(43,452	)
Tax benefit from audit settlements net of restructuring taxes		(24,395	)		(8,452	)		(16,880	)
Release of tax reserves		---			---			(32,967	)
	$	31,531		$	20,808		$	(13,508	)

Pretax income from foreign continuing operations was $390.9 million, $201.2 million and $195.1 million for the years ended March 31, 2011, 2010 and 2009, respectively. Unremitted foreign earnings that are considered to be permanently invested outside the U.S., and on which no deferred taxes have been provided, amounted to approximately $1,539.8 million at March 31, 2011. The Company has the ability and intent to indefinitely reinvest the foreign earnings. Should the Company elect in the future to repatriate a portion of the foreign earnings so invested, the Company would incur income tax expense on such repatriation, net of any available deductions and foreign tax credits. This would result in additional income tax expense beyond the computed effective tax rate in such periods.

During the year ended March 31, 2011, the Company settled an IRS examination of fiscal years 2006, 2007 and 2008. In addition, the Company benefited from the expiration of the statute of limitations related to previously accrued tax reserves and incurred a tax charge related to corporate restructuring. The tax benefit associated with these items was a decrease in the effective tax rate from continuing operations of 5.3%.

In December 2010, the U.S. Congress retroactively reinstated the research and development tax credit from January 1, 2010. As a result, the Company recognized a one-time tax benefit of $1.5 million in the quarter ended December 31, 2010.

During the year ended March 31, 2010, the Company settled an IRS examination of fiscal years 2002, 2003 and 2004 which resulted in a one-time tax benefit of $8.5 million. This tax benefit decreased the Company's effective tax rate by approximately 3.6 percentage points to 8.8%.

In October 2008, the U.S. Congress passed the Emergency Economic Stabilization Act of 2008 which included a provision to extend the research and development tax credit retroactively from January 1, 2008. As a result, the Company recognized a one-time tax benefit of $1.5 million in the quarter ending December 31, 2008.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (amounts in thousands):

	March 31,
	2011			2010
Deferred tax assets:
Deferred intercompany profit	$	11,031		$	7,711
Deferred income on shipments to distributors		33,304			24,531
Inventory valuation		5,740			842
Net operating loss carryforward		2,051			4,995
Share-based compensation		25,195			30,316
Income tax credits		50,795			45,171
Accrued expenses and other		11,052			9,512
Gross deferred tax assets		139,168			123,078
Valuation allowances		(50,346	)		(45,268	)
Net deferred tax assets		88,822			77,810
Deferred tax liabilities:
Income tax credits		17,852			---
Net operating loss carryforward		833			---
Property, plant and equipment, principally due to differences in depreciation		(5,036	)		(3,861	)
Junior convertible debentures		(407,477	)		(372,252	)
Other		(5,699	)		(600	)
Gross deferred tax liability		(399,527	)		(376,713	)
Net deferred tax liability	$	(310,705	)	$	(298,903	)

The Company had state and foreign net operating loss carryforwards with an estimated tax effect of $2.9 million available at March 31, 2011. The state net operating loss carryforwards expire at various times between 2014 and 2024. The Company believes that it is more likely than not that the benefit from certain state net operating loss carryforwards will not be realized. In recognition of this risk, at March 31, 2011, the Company has provided a valuation allowance of $2.1 million. The Company also has state tax credits with an estimated tax effect of $44.8 million available at March 31, 2011. These state tax credits expire at various times between 2011 and 2026. The Company believes that it is more likely than not that the benefit from these state tax credits will not be realized, and therefore has provided a valuation allowance against the full amount. The Company has U.S foreign tax credits with an estimated tax effect of $3.7 million that expire at various times between 2013 and 2016. The Company believes it is more likely than not that the benefit from these credits will not be fully realized and has provided a valuation allowance of $3.5 million. At March 31, 2011, the Company had alternative minimum tax net operating loss carryforwards of $4.0 million that expire between 2024 and 2026.

The Company's Thailand manufacturing operations currently benefit from numerous tax holidays granted to the Company based on its investment in property, plant and equipment in Thailand. The Company's tax holiday periods in Thailand expire at various times in the future, however, the Company actively seeks to acquire new tax holidays. The Company does not expect the future expiration of any of its tax holiday periods in Thailand to have a material impact on its effective tax rate. The aggregate dollar benefits derived from these tax holidays approximated $20.9 million, $17.3 million and $6.4 million for the years ended March 31, 2011, 2010 and 2009, respectively. The benefit the tax holiday had on diluted net income per share approximated $0.10 in the year ended March 31, 2011 and $0.09 for the year ended March 31, 2010 and $0.03 for the year ended March 31, 2009.