Income Taxes

The provision for income taxes reflects tax on foreign earnings and federal and state tax on U.S. earnings. The Company had a negative effective tax rate of 20.4% for the three months ended June 30, 2016 and a negative effective tax rate of 9.1% for the three months ended June 30, 2015. The Company's effective tax rate for the three months ended June 30, 2016 is lower compared to the prior year primarily due to acquisition related expenses. The Company's effective tax rate is lower than statutory rates in the U.S. due primarily to its mix of earnings in foreign jurisdictions with lower tax rates as well as numerous tax holidays it receives related to its Thailand manufacturing operations 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 obtain 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 effected tax rate. The remaining material components of foreign income taxed at a rate lower than the U.S. are earnings accrued in Ireland and earnings accrued by the Company's offshore technology company which is resident in the Cayman Islands.

The following tables summarize the activity related to the Company's gross unrecognized tax benefits for the three months ended June 30, 2016 and the year ended March 31, 2016 (amounts in thousands):



	Three Months Ended
	June 30, 2016
Beginning balance	$	220,669
Increases related to acquisitions	193,889
Decreases related to statute of limitation expirations	(249		)
Increases related to current year tax positions	6,773
Decreases related to prior year tax positions	(134		)
Ending Balance	$	420,948



	Year Ended
	March 31, 2016
Beginning balance	$	170,654
Increases related to acquisitions	46,245
Decreases related to settlements with tax authorities	(7,954		)
Decreases related to statute of limitation expirations	(4,591		)
Increases related to current year tax positions	16,315
Ending Balance	$	220,669

As of June 30, 2016, the Company had accrued approximately $12.2 million related to the potential payment of interest on the Company's uncertain tax positions. The current year increase to the potential payment of interest is primarily composed of a $9.3 million increase related to acquisitions. As of March 31, 2016, the Company had accrued approximately $2.4 million related to the potential payment of interest on the Company's uncertain tax positions. As of June 30, 2016, the Company had accrued for approximately $53.2 million in penalties related to its uncertain tax positions. The current year increase to the potential payment of penalties is primarily composed of a $25.6 million increase related to acquisitions. As of March 31, 2016, the Company had accrued for approximately $27.6 million in penalties related to its uncertain tax positions.

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 2005 and later tax years remain effectively open for examination by tax authorities. The U.S. Internal Revenue Service (IRS) is currently auditing the Company's 2011 and 2012 tax years. For foreign tax returns, the Company is generally no longer subject to income tax examinations for years prior to fiscal 2007.

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 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 adequate for all open years based on an assessment of many factors including past experience and interpretations of tax laws applied to the facts of each matter.

The Company believes it maintains appropriate reserves to offset any potential income tax liabilities that may arise upon final resolution of matters for open tax years. If such reserve 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 amounts prove to be less than an ultimate assessment, a future charge to expense would be recorded in the period in which the assessment is determined. Although the timing of the resolution or closure of audits is highly uncertain, the Company does not believe it is reasonably possible that the unrecognized tax benefits would materially change in the next 12 months.