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 fiscal 2009 through fiscal 2012 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 2005.

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 and fiscal 2012 are 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, 2009 to March 31, 2012 (amounts in thousands):



	Year Ended March 31,
	2012			2011			2010
Beginning balance	$	58,125		$	57,140		$	70,051
Increases related to acquisitions	—			36,587			—
Decreases related to prior year tax positions	(2,153		)	(49,932		)	(25,492		)
Increases related to current year tax positions	11,992			13,951			11,332
Increases related to prior year tax positions	2,526			379			1,249
Ending balance	$	70,490		$	58,125		$	57,140

The Company made certain corrections to the presentation of its March 31, 2011 gross unrecognized tax benefits compared to the amounts presented in its fiscal 2011 Notes to Consolidated Financial Statements. The March 31, 2011 corrected balance of gross unrecognized tax benefits is $58.1 million compared to the $45.9 million reflected in the prior year Notes to Consolidated Financial Statements. There were no changes to the consolidated balance sheet as of March 31, 2011, or the results of operations or cash flows for the years then ended resulting from the presentation correction.

As of March 31, 2012, the Company had accrued approximately $3.1 million related to the potential payment of interest on the Company's uncertain tax positions. As of March 31, 2011, the Company had accrued approximately $2.1 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 $0.9 million and $1.0 million in penalties related to its uncertain tax positions related to its international locations as of March 31, 2012 and March 31, 2011, respectively. Interest and penalties charged or (credited) to operations during the years ended March 31, 2012, 2011 and 2010 related to the Company's uncertain tax positions were $0.9 million, $(3.6) million and $2.5 million, respectively.

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



	Year Ended March 31,
	2012			2011			2010
Current (benefit) expense:
Federal	$	7,611		$	294		$	(4,358	)
State	544			21			(436		)
Foreign	21,174			22,877			6,981
Total current	$	29,329		23,192			2,187
Deferred expense (benefit):
Federal	$	14,942		11,035			16,663
State	1,067			788			1,668
Foreign	(2,348		)	(3,484		)	290
Total deferred	13,661			8,339			18,621
	$	42,990		$	31,531		$	20,808

The tax benefit associated with the Company's equity incentive plans reduced taxes currently payable by $11.0 million, $7.5 million and $3.7 million for the years ended March 31, 2012, 2011 and 2010, 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,
	2012			2011			2010
Computed expected income tax provision	$	132,894		$	161,244		$	83,235
State income taxes, net of federal benefits	1,280			1,746			915
Research and development tax credits - current year	(3,750		)	(3,691		)	(1,500		)
Research and development tax credits - prior years	(5,894		)	—			—
Foreign income taxed at lower than the federal rate	(81,540		)	(103,373		)	(53,390		)
Tax benefit from audit settlements net of restructuring taxes	—			(24,395		)	(8,452		)
	$	42,990		$	31,531		$	20,808

Pretax income from foreign continuing operations was $328.5 million, $390.9 million and $201.2 million for the years ended March 31, 2012, 2011 and 2010, 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 $1.9 billion at March 31, 2012. 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 a corporate restructuring. The total tax benefit associated with these items resulted in a reduction of income tax provision of approximately $24.4 million and 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%.

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,
	2012			2011
Deferred tax assets:
Deferred intercompany profit	$	14,624		$	11,031
Deferred income on shipments to distributors	23,646			33,304
Inventory valuation	6,245			5,740
Net operating loss carryforward	33,639			2,884
Share-based compensation	25,693			25,195
Income tax credits	103,882			68,647
Accrued expenses and other	10,770			11,052
Gross deferred tax assets	218,499			157,853
Valuation allowances	(78,506		)	(50,346		)
Deferred tax assets, net of valuation allowances	139,993			107,507
Deferred tax liabilities:
Property, plant and equipment, principally due to differences in depreciation	(7,844		)	(5,036		)
Junior convertible debentures	(445,826		)	(407,477		)
Other	(6,500		)	(5,699		)
Deferred tax liabilities	(460,170		)	(418,212		)
Net deferred tax liability	$	(320,177	)	$	(310,705	)

Reported as:
Current deferred tax assets	$	91,191		$	88,822
Non-current deferred tax liability	(411,368		)	(399,527		)
Net deferred tax liability	(320,177		)	(310,705		)

The Company had federal, state and foreign net operating loss carryforwards with an estimated tax effect of $33.6 million available at March 31, 2012. The state net operating loss carryforwards expire at various times between 2014 and 2029. 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, 2012, the Company has provided a valuation allowance of $5.4 million. The Company also has state tax credits with an estimated tax effect of $53.2 million available at March 31, 2012. These state tax credits expire at various times between 2012 and 2027. 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 $20.0 million that expire at various times between 2013 and 2017. 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 $19.9 million. At March 31, 2012, the Company had credits for increasing research activity in the amount of $28.5 million that expire at various times between 2017 and 2032. In addition, the Company had $2.2 million of alternative minimum tax credits that do not expire. At March 31, 2012, the Company had alternative minimum tax net operating loss carryforwards of approximately $52.7 million that expire in 2032.

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 $6.5 million, $20.9 million and $17.3 million for the years ended March 31, 2012, 2011 and 2010, respectively. The benefit the tax holiday had on diluted net income per share approximated $0.03 in the year ended March 31, 2012, $0.10 for the year ended March 31, 2011 and $0.09 for the year ended March 31, 2010.