13. 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,

	2014		2013		2012
	(In thousands)
Domestic	$	314,639	$	170,071	$	186,855
Foreign		85,815		158,744		387,875


Total	$	400,454	$	328,815	$	574,730

The provision for income taxes from continuing operations consisted of the following:

	Fiscal Year Ended March 31,

	2014			2013			2012
	(In thousands)
Current:
Domestic	$	(681	)	$	680		$	303
Foreign		73,992			60,466			56,100


		73,311			61,146			56,403
Deferred:
Domestic		9			(1,187	)		386
Foreign		(38,460	)		(33,646	)		(2,829	)


		(38,451	)		(34,833	)		(2,443	)


Provision for income taxes	$	34,860		$	26,313		$	53,960

The domestic statutory income tax rate was approximately 17.0% in fiscal years 2014, 2013 and 2012. The reconciliation of the income tax expense from continuing operations 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,

	2014			2013			2012
	(In thousands)
Income taxes based on domestic statutory rates	$	68,077		$	55,899		$	95,858
Effect of tax rate differential		(68,654	)		(120,785	)		(177,540	)
Intangible amortization		4,750			4,881			9,502
Change in liability for uncertain tax positions		(2,178	)		15,268			34,517
Change in valuation allowance		26,838			68,596			93,336
Other		6,027			2,454			(1,713	)


Provision for income taxes	$	34,860		$	26,313		$	53,960

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, 2014, 2013 and 2012 was $15.2 million, $22.6 million and $41.8 million, respectively. For the fiscal year ended March 31, 2014, the effect on basic and diluted earnings per share was $0.02 and $0.02, and the effect on basic and diluted earnings per share during fiscal years 2013 and 2012 were $0.03 and $0.03, and $0.06 and $0.06, respectively. Unless extended or otherwise renegotiated, the Company's existing holidays will expire in the fiscal years ending March 31, 2015 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, 2014, 2013 and 2012 were $51.5 million, $26.7 million and $17.7 million, respectively.

The components of deferred income taxes are as follows:

	As of March 31,

	2014			2013
	(In thousands)
Deferred tax liabilities:
Fixed assets	$	(76,524	)	$	(36,542	)
Others		(54,900	)		(61,621	)


Total deferred tax liabilities		(131,424	)		(98,163	)


Deferred tax assets:
Fixed assets		80,801			66,959
Intangible assets		62,951			112,327
Deferred compensation		10,263			10,341
Inventory valuation		9,255			12,514
Provision for doubtful accounts		3,558			13,807
Net operating loss and other carryforwards		2,613,095			2,600,895
Others		201,906			167,085


		2,981,829			2,983,928
Valuation allowances		(2,749,040	)		(2,825,579	)


Net deferred tax assets, net of valuation allowance		232,789			158,349


Net deferred tax asset	$	101,365		$	60,186




The net deferred tax asset is classified as follows:
Current asset (classified as other current assets)	$	13,522		$	7,881
Long-term asset (classified as other assets)		219,267			150,468
Long-term liability (classified as other liabilities)		(131,424	)		(98,163	)


Total	$	101,365		$	60,186

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 deferred tax assets of approximately $2.7 billion related to tax losses and other carryforwards against which the Company has recorded a valuation allowance for all but $46.0 million of the deferred tax assets. These tax losses and other carryforwards, on a tax return basis, will expire at various dates as follows:

	(In thousands)

2015 - 2020	$	279,204
2021 - 2026		1,001,767
2027 and post		714,406
Indefinite		691,790


	$	2,687,167

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 $779.0 million of undistributed earnings of its subsidiaries which are considered to be indefinitely reinvested outside of Singapore as management has plans for the use of such earnings to fund certain activities outside of Singapore. 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,

	2014			2013
	(In thousands)
Balance, beginning of fiscal year	$	230,018		$	166,432
Additions based on tax position related to the current year		16,823			22,185
Additions for tax positions of prior years		36,689			62,610
Reductions for tax positions of prior years		(19,755	)		(15,001	)
Reductions related to lapse of applicable statute of limitations		(10,261	)		(5,444	)
Settlements		(8,964	)		(1,220	)
Other		(686	)		456


Balance, end of fiscal year	$	243,864		$	230,018

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. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease by an estimated range of $18 million to $37 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 2003.

Of the $243.9 million of unrecognized tax benefits at March 31, 2014, $166.3 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, 2014 and 2013, the Company recognized interest and penalties of approximately $8.4 million and $5.1 million, respectively. The Company had approximately $15.6 million and $11.9 million accrued for the payment of interest and penalties as of the fiscal years ended March 31, 2014 and 2013, respectively.