INCOME TAXES

The United States and foreign components of income before income taxes are as follows:



	2013		2012		2011
	(In thousands)
United States	$	142,085	$	200,802	$	176,824
Foreign	245,805		209,427		253,673
Total	$	387,890	$	410,229	$	430,497

The components of the provision for income taxes are as follows:



	2013			2012			2011
	(In thousands)
Current:
Federal	$	51,389		$	81,019		$	50,022
Foreign	37,221			30,059			29,169
State	11,605			17,395			11,905
Total current	100,215			128,473			91,096
Deferred:
Federal	(34,897		)	(64,960		)	(8,631		)
Foreign	(8,413		)	1,409			(4,792		)
State	(8,538		)	(7,240		)	(2,806		)
Total deferred	(51,848		)	(70,791		)	(16,229		)
Total provision	$	48,367		$	57,682		$	74,867

The following table presents the breakdown between current and non-current net deferred tax assets:



	December 31,
	2013			2012
	(In thousands)
Deferred tax assets - current	$	48,470		$	36,846
Deferred tax liabilities - current	(364		)	(876		)
Deferred tax assets- non current	115,418			43,097
Deferred tax liabilities - non current	(13,127		)	(19,756		)
Total net deferred tax assets	$	150,397		$	59,311

The significant components of the Company’s deferred tax assets and liabilities consisted of the following:



	December 31,
	2013			2012
	(In thousands)
Deferred tax assets:
Accruals and reserves	$	25,556		$	36,128
Deferred revenue	55,688			41,820
Tax credits	60,519			43,657
Net operating losses	103,329			89,856
Other	10,537			8,452
Stock based compensation	72,074			54,852
Depreciation and amortization	1,675			—
Valuation allowance	(26,465		)	(18,185		)
Total deferred tax assets	302,913			256,580
Deferred tax liabilities:
Depreciation and amortization	—			(40,159		)
Acquired technology	(136,258		)	(140,017		)
Prepaid expenses	(16,258		)	(17,093		)
Total deferred tax liabilities	(152,516		)	(197,269		)
Total net deferred tax assets	$	150,397		$	59,311

The authoritative guidance requires a valuation allowance to reduce the deferred tax assets reported if it is not more likely than not that some portion or all of the deferred tax assets will be realized. At December 31, 2013, the Company determined that a $26.5 million valuation allowance relating to deferred tax assets for net operating losses and tax credits was necessary.

The Company does not expect to remit earnings from its foreign subsidiaries. Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $1,238.0 million at December 31, 2013. Those earnings are considered to be permanently reinvested and, accordingly, no U.S. federal and state income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company could be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to various foreign countries. The Company maintains certain strategic management and operational activities in overseas subsidiaries and its foreign earnings are taxed at rates that are generally lower than in the United States.

At December 31, 2013, the Company had $220.0 million of remaining net operating loss carry forwards in the United States from acquisitions. The utilization of these net operating loss carry forwards are limited in any one year pursuant to Internal Revenue Code Section 382 and begin to expire in 2019. At December 31, 2013, the Company had $52.0 million of remaining net operating loss carry forwards in foreign jurisdictions that do not expire.

At December 31, 2013, the Company had research and development tax credit carry forwards of approximately $55.6 million that begin to expire in 2024.

A reconciliation of the Company’s effective tax rate to the statutory federal rate is as follows:



	Year Ended December 31,
	2013		2012		2011
Federal statutory taxes	35.0	%	35.0	%	35.0	%
State income taxes, net of federal tax benefit	1.2		1.9		1.7
Foreign operations	(14.8	)	(10.2	)	(14.5	)
Permanent differences	(1.1	)	(2.0	)	1.2
Tax credits	(10.9	)	(4.7	)	(7.1	)
Stock option compensation	0.4		0.1		0.1
Change in accruals for uncertain tax positions	3.3		(5.3	)	1.4
Other	(0.6	)	(0.7	)	(0.4	)
	12.5	%	14.1	%	17.4	%

The Company’s effective tax rate generally differs from the U.S. federal statutory rate of 35% due primarily to lower tax rates on earnings generated by the Company’s foreign operations that are taxed primarily in Switzerland. The Company has not provided for U.S. taxes for those earnings because it plans to reinvest all of those earnings indefinitely outside the United States. It was not practicable to determine the amount of unrecognized deferred tax liability for temporary differences related to investments in foreign subsidiaries.

The Company and certain of its subsidiaries are subject to U.S. federal income taxes, as well as income taxes of multiple state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2009.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2013 and 2012 is as follows (in thousands):



Balance at January 1, 2012	$	79,199
Additions based on tax positions related to the current year	2,459
Additions for tax positions of prior years	9,558
Reductions related to the expiration of statutes of limitations	(33,594		)
Settlements	(13,718		)

Balance at December 31, 2012	43,904
Additions based on tax positions related to the current year	13,694
Additions for tax positions of prior years	10,611
Reductions related to the expiration of statutes of limitations	(2,116		)
Settlements	(2,301		)

Balance at December 31, 2013	$	63,792

The Company's unrecognized tax benefits may change significantly over the next 12 months.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense. During the year ended December 31, 2013, the Company recognized $0.8 million of expense related to interest and penalties. The Company has no amounts accrued for the payment of interest and penalties at December 31, 2013.

The federal research and development credit expired on December 31, 2011. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law. Under this act, the federal research and development credit was retroactively extended for amounts paid or incurred after December 31, 2011 and before January 1, 2014. The effects of these changes in the tax law will result in net tax benefits of approximately $10.7 million, which were recognized in 2013, the year in which the law was enacted.