Income Tax

12 Months Ended

Mar. 31, 2012

Income Tax [Abstract]

Income Tax

10.    Income Tax

During the years ended March 31, 2012, 2011, and 2010, the Company recognized federal research and development tax credits of $1,055, $927 and $605, respectively, and state research and development tax credits of approximately $165, $119 and $129, respectively. Due to the expiration of the Internal Revenue Service (“IRS”) statute related to research and development credits on December 31, 2011, the Company’s research and development credits claimed for the year ended March 31, 2012 represent credits for the nine-month period from April 1, 2011 through December 31, 2011.

The Company also claimed the qualified production activities deduction under Section 199 of the Internal Revenue Code (“IRC”) for $10,025, $8,134, and $4,133 during the years ended March 31, 2012, 2011, and 2010, respectively. The research and development credits and the qualified production activities income deduction calculated by the Company involve certain assumptions and judgments regarding qualification of expenses under the relevant tax code provisions.

The provision (benefit) for income taxes consists of the following components:

	Fiscal Year Ended March 31,
	2012			2011			2010
Current:
Federal taxes	$	36,109		$	28,979		$	23,750
State taxes		8,614			6,501			5,043
Foreign taxes		73			—			—
Total current taxes		44,796			35,480			28,793
Deferred:
Federal taxes	$	(3,571	)	$	(2,168	)	$	(768	)
State taxes		(502	)		(502	)		(186	)
Foreign taxes		(73	)		—			—
Total deferred taxes		(4,146	)		(2,670	)		(954	)
Provision for income taxes	$	40,650		$	32,810		$	27,839

The provision for income taxes differs from the amount computed at the federal statutory rate as follows:

	Fiscal Year Ended March 31,
	2012			2011			2010
Current:
Federal income tax statutory rate		35.0	%		35.0	%		35.0	%
Increase (decrease) resulting from:
State income taxes, net of Federal benefit		4.5			4.1			4.3
Research and development tax credits		(0.9	)		(1.0	)		(0.9	)
Qualified production activities income deduction		(3.0	)		(3.0	)		(2.0	)
Other		(0.6	)		(0.3	)		0.1
Effective income tax rate		35.0	%		34.8	%		36.5	%

The net deferred tax assets and liabilities in the accompanying consolidated balance sheets consist of the following:

	March 31, 2012			March 31, 2011
Deferred tax assets:
Deferred revenue	$	8,618		$	5,715
Inventory valuation		113			122
Purchased in-process research and development		—			—
Accrued compensation and benefits		3,788			3,180
Deferred compensation		1,455			1,078
State income taxes		255			452
Compensatory stock option expense		1,828			1,759
Allowance for doubtful accounts		4,235			2,931
Other		4,813			1,071
Total deferred tax assets		25,105			16,308
Deferred tax liabilities:
Accelerated depreciation	$	(2,319	)	$	(2,181	)
Capitalized software		(7,797	)		(5,913	)
Intangibles assets		(7,307	)		(6,132	)
Prepaid expense		(2,979	)		(3,069	)
Other		73			—
Total deferred tax liabilities		(20,329	)		(17,295	)
Deferred tax assets (liabilities), net	$	4,776		$	(987	)

The deferred tax assets and liabilities have been shown net in the accompanying consolidated balance sheets based on the long-term or short-term nature of the items that give rise to the deferred amount. No valuation allowance has been made against the deferred tax assets as management expects to receive the full benefit of the assets recorded.

Uncertain tax positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits, which is recorded in income taxes payable in the Company’s consolidated balance sheet, is as follows:

Balance at March 31, 2010	$	656
Additions for prior year tax positions		34
Reductions for prior year tax positions		(18	)
Balance at March 31, 2011	$	672
Additions for prior year tax positions		26
Reductions for prior year tax positions		(285	)
Balance at March 31, 2012	$	413

The total amount of unrecognized tax benefit that, if recognized, would decrease the income tax provision is $413.

The Company’s continuing practice is to recognize estimated interest and/or penalties related to income tax matters in general and administrative expenses. The Company had approximately $75 and $83 of accrued interest related to income tax matters at March 31, 2012 and 2011, respectively. No penalties were accrued.

The Company’s income tax returns filed for tax years 2009 through 2011 and 2008 through 2011 are subject to examination by the federal and state taxing authorities, respectively. The Company is currently under examination by the IRS and is under examination by two state income tax authorities. The Company does not anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits or the expiration of statute of limitations within the next twelve months.