Income Taxes:

12 Months Ended

Mar. 31, 2012

Income Taxes:

Income Taxes:

8.Income Taxes:

The reconciliation of our income tax provision (benefit) to taxes computed at U.S. federal statutory rates is as follows:

	Year Ended March 31,
	2012			2011			2010
	(In thousands)
Income tax provision (benefit) at statutory rates	$	663		$	(1,658	)	$	1,140
State income taxes net of federal benefit	562			189			192
Impairment charges	—			2,044			—
Research credits	(246		)	—			—
Change in fair value of contingent acquisition consideration	(211		)	—			—
Compensation charges	59			94			(12		)
Unrecognized tax benefits	(276		)	(288		)	(362		)
Other	92			(103		)	2
Provision for income taxes	$	643		$	278		$	960

The components of deferred tax assets and liabilities are as follows:

	March 31,
	2012			2011
	(In thousands)
Deferred tax assets:
Net operating losses	$	8,246		$	12,315
Credit carry forwards	773			319
Deferred compensation and payroll	941			823
Bad debt allowance and other reserves	433			763
Deferred rent	435			—
Other, net	300			252
Total deferred tax assets	11,128			14,472
Deferred tax liabilities:
Property and equipment	(517		)	(66		)
Deferred rent	—			(145		)
Acquired intangibles	(754		)	(527		)
Goodwill	(193		)	—
Total deferred tax liabilities	(1,464		)	(738		)
Net deferred tax assets	$	9,664		$	13,734

The components of current and deferred federal and state income tax provisions and (benefits) are as follows:

	Year Ended March 31,
	2012			2011			2010
	(In thousands)
Current income tax provision (benefit):
Federal	$	(221	)	$	(186	)	$	(234	)
State	208			264			127
Deferred income tax provision (benefit):
Federal	12			251			903
State	644			(51		)	164
Net income tax provision (benefit)	$	643		$	278		$	960

At March 31, 2012, we had approximately $525,000 in federal alternative minimum tax credit carryforwards that can be carried forward indefinitely. We had $25.0 million of federal net operating loss carryforwards at March 31, 2012 that begin to expire in 2021. We also had $10.9 million of state net operating loss carryforwards at March 31, 2012, of which $420,000 are scheduled to expire in 2014, $10.2 million are scheduled to expire in 2015 and $298,000 are scheduled to expire in 2031.

Due to changes in stock ownership, our federal net operating loss carryforwards of approximately $25.0 million as of March 31, 2012 and other federal attributes are subject to an annual limitation under Section 382 of the Internal Revenue Code. As of March 31, 2012, based on the cumulative amount of tax attributes that have become available under the limitation imposed by Section 382, all of our net operating losses are now fully available for use. Our deferred tax assets at March 31, 2012 do not include approximately $901,000 of excess tax benefits from employee stock option exercises that are a component of our net operating loss carryforwards. If and when such excess tax benefits are realized, stockholders’ equity will be adjusted.

As of March 31, 2012 and 2011, we determined that it was more likely than not that our deferred tax assets will be realized. Accordingly, no valuation allowance has been recorded against our deferred tax assets as of either such dates. In making our determination as to the realizability of our deferred tax assets, we reviewed all available positive and negative evidence, including reversal of deferred tax liabilities, potential carrybacks, projected future taxable income, tax planning strategies and recent financial performance.

Unrecognized Tax Benefits

As of March 31, 2012 and 2011, our gross unrecognized tax benefits were $1.7 million and $1.9 million, respectively, of which $1.3 million and $1.5 million, respectively, if recognized, would affect our effective tax rate.

We recognize interest and/or penalties related to income tax matters in income tax expense. As of March 31, 2012 and 2011, we had accrued cumulatively $56,000 and $45,000, respectively, for the payment of potential interest and penalties.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

	Year Ended March 31,
	2012			2011			2010
	(In thousands)
Gross unrecognized tax benefits at beginning of year	$	1,941		$	2,153		$	2,525
Increases for tax positions taken in prior years	97			121			93
Decreases for tax positions taken in prior years	(10		)	(15		)	—
Increases for tax positions taken in the current year	20			17			—
Decreases for tax positions taken in the current year	—			—			(51		)
Settlement with taxing authorities	—			(8		)	—
Lapse in statute of limitations	(356		)	(327		)	(414		)
Gross unrecognized tax benefits at March 31	$	1,692		$	1,941		$	2,153

We anticipate a decrease in gross unrecognized tax benefits of approximately $60,000 within the next twelve months based on federal and state statute expirations in various jurisdictions.

We are subject to taxation in the U.S. and various states. We are subject to U.S. federal tax examination for fiscal tax years ended March 31, 2009 or later, and state and local income tax examination for fiscal tax years ended March 31, 2008 or later.