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 87.3% for the nine months ended December 31, 2016 and a negative effective tax rate of 14.7% for the nine months ended December 31, 2015. The Company's effective tax rate for the nine months ended December 31, 2016 is lower compared to the prior year primarily due to acquisition related expenses that reduced taxable income in the U.S. and the release of reserves due to favorable outcomes of tax authority examinations and the expiration of statutes of limitations on certain tax periods. 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 nine months ended December 31, 2016 and the year ended March 31, 2016 (amounts in thousands):



	Nine Months Ended
	December 31, 2016
Balance at March 31, 2016	$	220,669
Increases related to acquisitions	198,034
Decreases related to settlements with tax authorities	(19,222		)
Decreases related to statute of limitation expirations	(4,105		)
Increases related to current year tax positions	19,360
Decreases related to prior year tax positions	(8,385		)
Balance at December 31, 2016	$	406,351



	Year Ended
	March 31, 2016
Balance at March 31, 2015	$	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
Balance at March 31, 2016	$	220,669

As of December 31, 2016 and March 31, 2016, the Company had accrued approximately $18.3 million and $2.4 million, respectively, related to the potential payment of interest on the Company's uncertain tax positions with the increase being primarily composed of a $9.3 million increase related to acquisitions. As of December 31, 2016 and March 31, 2016, the Company had accrued approximately $61.3 million and $27.6 million, respectively, in penalties related to its uncertain tax positions with the increase being primarily composed of a $25.6 million increase related to acquisitions. Interest and penalties charged to operations during the nine months ended December 31, 2016 and 2015 related to the Company's uncertain tax positions were $14.7 million and $1.2 million, respectively. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

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. During the three months ended December 31, 2016, the U.S. Internal Revenue Service (IRS) finalized the audit of the Company's 2011 and 2012 income tax years. The close of the audit did not have an adverse impact on the Company's financial statements. 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.