11. INCOME TAXES

The domestic (Singapore) and foreign components of income from continuing operations before income taxes were comprised of the following:

	Fiscal Year Ended March 31,

	2013		2012		2011
	(In thousands)
Domestic	$	170,071	$	186,855	$	231,209
Foreign		158,744		387,875		403,101

Total	$	328,815	$	574,730	$	634,310

The provision for income taxes consisted of the following:

	Fiscal Year Ended March 31,

	2013			2012			2011
	(In thousands)
Current:
Domestic	$	680		$	303		$	(972	)
Foreign		60,466			56,100			26,671

		61,146			56,403			25,699
Deferred:
Domestic		(1,187	)		386			(319	)
Foreign		(33,646	)		(2,829	)		(3,331	)

		(34,833	)		(2,443	)		(3,650	)

Provision for income taxes	$	26,313		$	53,960		$	22,049

The domestic statutory income tax rate was approximately 17.0% in fiscal years 2013, 2012 and 2011. The reconciliation of the income tax expense expected based on domestic statutory income tax rates to the expense for income taxes included in the consolidated statements of operations is as follows:

	Fiscal Year Ended March 31,

	2013			2012			2011
	(In thousands)
Income taxes based on domestic statutory rates	$	55,899		$	95,858		$	106,725
Effect of tax rate differential		(120,785	)		(177,540	)		26,459
Intangible amortization		4,881			9,502			12,055
Change in liability for uncertain tax positions		15,268			34,517			(29,205	)
Change in valuation allowance		68,596			93,336			(90,033	)
Other		2,454			(1,713	)		(3,952	)

Provision for income taxes	$	26,313		$	53,960		$	22,049

A number of countries in which the Company is located allow for tax holidays or provide other tax incentives to attract and retain business. In general, these holidays were secured based on the nature, size and location of the Company's operations. The aggregate dollar effect on the Company's income resulting from tax holidays and tax incentives to attract and retain business for the fiscal years ended March 31, 2013, 2012 and 2011 was $22.6 million, $41.8 million and $66.5 million, respectively. For the fiscal year ended March 31, 2013, the effect on basic and diluted earnings per share was $0.03 and $0.03, respectively, and the effect on basic and diluted earnings per share during fiscal years 2012 and 2011 were $0.06 and $0.06, and $0.09 and $0.08, respectively. Unless extended or otherwise renegotiated, the Company's existing holidays will expire in the fiscal years ending March 31, 2014 through fiscal year 2022.

Under its territorial tax system, Singapore generally does not tax foreign sourced income until repatriated to Singapore. The Company has included the effects of Singapore's territorial tax system in the rate differential line above. The tax effect of foreign income not repatriated to Singapore for the fiscal years ended March 31, 2013, 2012 and 2011 were $26.7 million, $17.7 million and $32.6 million, respectively.

The components of deferred income taxes are as follows:

	As of March 31,

	2013			2012
	(In thousands)
Deferred tax liabilities:
Fixed assets	$	(36,542	)	$	(30,159	)
Others		(61,621	)		(30,032	)

Total deferred tax liabilities		(98,163	)		(60,191	)

Deferred tax assets:
Fixed assets		66,959			73,588
Intangible assets		112,327			178,910
Deferred compensation		10,341			11,088
Inventory valuation		12,514			12,265
Provision for doubtful accounts		13,807			3,340
Net operating loss and other carryforwards		2,600,895			2,753,940
Others		167,085			176,547

		2,983,928			3,209,678
Valuation allowances		(2,825,579	)		(3,099,561	)

Net deferred tax assets, net of valuation allowance		158,349			110,117

Net deferred tax asset	$	60,186		$	49,926

The net deferred tax asset is classified as follows:
Current asset (classified as other current assets)	$	7,881		$	815
Long-term asset		52,305			49,111

Total	$	60,186		$	49,926

Utilization of the Company's deferred tax assets is limited by the future earnings of the Company in the tax jurisdictions in which such deferred assets arose. As a result, management is uncertain as to when or whether these operations will generate sufficient profit to realize any benefit from the deferred tax assets. The valuation allowance provides a reserve against deferred tax assets that are not more likely than not to be realized by the Company. However, management has determined that it is more likely than not that the Company will realize certain of these benefits and, accordingly, has recognized a deferred tax asset from these benefits. The change in valuation allowance is net of certain increases and decreases to prior year losses and other carryforwards that have no current impact on the tax provision. Approximately $34.0 million of the valuation allowance relates to income tax benefits arising from the exercise of stock options, which if realized will be credited directly to shareholders' equity and will not be available to benefit the income tax provision in any future period.

The Company has recorded a deferred tax asset of approximately $43.7 million associated with its tax loss and tax credit carryforwards. Approximately $21.1 million of this deferred tax asset is of indefinite duration. The amount of the remaining deferred tax asset expires over the period from 2014 to 2032, of which the amount expiring in 2014 is insignificant.

The amount of deferred tax assets considered realizable, however, could be reduced or increased in the near-term if facts, including the amount of taxable income or the mix of taxable income between subsidiaries, differ from management's estimates.

The Company does not provide for income taxes on approximately $457.7 million of undistributed earnings of its foreign subsidiaries, as such earnings are not intended by management to be repatriated in the foreseeable future. Determination of the amount of the unrecognized deferred tax liability on these undistributed earnings is not practicable.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	Fiscal Year Ended March 31,

	2013			2012
	(In thousands)
Balance, beginning of fiscal year	$	166,432		$	134,627
Additions based on tax position related to the current year		22,185			25,113
Additions for tax positions of prior years		62,610			25,719
Reductions for tax positions of prior years		(15,001	)		(18,257	)
Reductions related to lapse of applicable statute of limitations		(5,444	)		(788	)
Settlements		(1,220	)		(1,386	)
Other		456			1,404

Balance, end of fiscal year	$	230,018		$	166,432

The Company's unrecognized tax benefits are subject to change over the next twelve months primarily as a result of the expiration of certain statutes of limitations and as audits are settled. During the first quarter of fiscal year 2014, the liability for unrecognized tax benefits will decrease by approximately $13.2 million due to the settlement of a tax audit subsequent to the balance sheet date. The Company also believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease by an estimated range of $18.0 to $30.8 million within the next twelve months primarily due to potential settlements of various audits and the expiration of certain statutes of limitations.

The Company and its subsidiaries file federal, state, and local income tax returns in multiple jurisdictions around the world. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years before 2001.

Of the $230 million of unrecognized tax benefits at March 31, 2013, $172.8 million will affect the annual effective tax rate if the benefits are eventually recognized. The amount that does not impact the effective tax rate relates to positions that would be settled with a tax loss carryforward previously subject to a valuation allowance.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits within the Company's tax expense. During the fiscal years ended March 31, 2013 and 2012, the Company recognized interest of approximately $5.1 million and $5.4 million, respectively, and no penalties. The Company had approximately $11.9 million and $10.6 million accrued for the payment of interest as of the fiscal years ended March 31, 2013 and 2012, respectively. The Company has not accrued for the payment of penalties for the fiscal years ended March 31, 2013 and 2012, respectively.