INCOME TAXES:

12 Months Ended

Mar. 31, 2013

INCOME TAXES:

INCOME TAXES:

13.          INCOME TAXES:

Total income tax expense (benefit) was allocated as follows (dollars in thousands):

	2013			2012		2011
Income from continuing operations	$	33,058		$	29,129	$	31,726
Income from discontinued operations	—			19,388		2,351
Stockholders’ equity:
Tax impact of stock options, warrants and restricted stock	(357		)	1,310		316
	$	32,701		$	49,827	$	34,393

Income tax expense (benefit) attributable to earnings from continuing operations consists of (dollars in thousands):

	2013			2012			2011
Current:
U.S. Federal	$	32,782		$	22,919		$	10,860
Non-U.S.	716			295			176
State	3,138			3,687			2,111
	36,636			26,901			13,147
Deferred:
U.S. Federal	(3,874		)	900			19,477
Non-U.S.	(574		)	2,359			(264		)
State	870			(1,031		)	(634		)
	(3,578		)	2,228			18,579
Total	$	33,058		$	29,129		$	31,726

Earnings (loss) before income tax attributable to U.S. and non-U.S. continuing operations consist of (dollars in thousands):

	2013		2012			2011
U.S.	$	89,791	$	100,051		$	93,503
Non-U.S.	386		(33,305		)	(93,615		)
Total	$	90,177	$	66,746		$	(112	)

Earnings before income taxes, as shown above, are based on the location of the entity to which such earnings are attributable.  However, since such earnings may be subject to taxation in more than one country, the income tax provision shown above as U.S. or non-U.S. may not correspond to the earnings shown above.

Below is a reconciliation of income tax expense (benefit) computed using the U.S. federal statutory income tax rate of 35% of earnings before income taxes to the actual provision for income taxes (dollars in thousands) for continuing operations:

	2013			2012			2011
Computed expected tax expense (benefit)	$	31,562		$	23,361		$	(39	)
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal benefit	1,631			1,672			1,892
Research, experimentation and other tax credits	(1,408		)	(518		)	(3,897		)
Impairment of goodwill and intangibles not deductible for tax	—			5,031			28,006
Permanent differences between book and tax expense	(481		)	(9,507		)	(58		)
Non-U.S. subsidiaries taxed at other than 35%	1,761			3,670			4,409
Adjustment to valuation allowances	726			4,598			1,312
Other, net	(733		)	822			101
	$	33,058		$	29,129		$	31,726

In fiscal year 2013, the Company recorded $0.7 million in additional valuation allowances for deferred tax assets principally related to a state jurisdiction and in fiscal year 2012, the Company recorded $4.6 million in additional valuation allowances for deferred tax assets primarily consisting of $5.2 million related to a foreign jurisdiction, offset by other adjustments.  The increases in valuation allowances were due to the change in management’s assessment of future projections in certain state and foreign jurisdictions.

Below is a reconciliation of income tax expense (benefit) computed using the U.S. federal statutory income tax rate of 35% of earnings before income taxes to the actual provision for income taxes for discontinued operations (dollars in thousands):

	2012		2011
Computed expected tax expense (benefit)	$	18,650	$	2,011
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal benefit	737		187
Other, net	1		153
	$	19,388	$	2,351

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at March 31, 2013 and 2012 are presented below.  In accordance with income tax accounting standards, as of March 31, 2013 the Company has not recognized deferred income taxes on approximately $38.1 million of undistributed earnings of foreign subsidiaries that are indefinitely reinvested outside the respective parent’s country.  Calculation of the deferred income tax related to these earnings is not practicable (dollars in thousands).

	2013			2012
Deferred tax assets:
Accrued expenses not currently deductible for tax purposes	$	9,183		$	11,228
Revenue recognized for tax purposes in excess of revenue for financial reporting purposes	4,314			3,878
Net operating loss and tax credit carryforwards	45,746			51,153
Other	11,945			10,410
Total deferred tax assets	71,188			76,669
Less valuation allowance	35,981			39,083
Net deferred tax assets	35,207			37,586
Deferred tax liabilities:
Intangible assets, principally due to differences in amortization	$	(66,959	)	$	(64,798	)
Costs capitalized for financial reporting purposes in excess of amounts capitalized for tax purposes	(24,869		)	(26,072		)
Property and equipment, principally due to differences in depreciation	(17,702		)	(24,648		)
Total deferred tax liabilities	(109,530		)	(115,518		)
Net deferred tax liability	$	(74,323	)	$	(77,932	)

At March 31, 2013, the Company has net operating loss carryforwards of approximately $12.5 million and $62.6 million for U.S. federal and state income tax purposes, respectively.  These net operating loss carryforwards expire in various amounts from 2013 through 2031.  The Company has foreign net operating loss carryforwards of approximately $126.9 million. Of this amount, $123.8 million do not have expiration dates.  The remainder expires in various amounts through 2022.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Based upon the Company’s history of profitability and taxable income and the reversal of taxable temporary differences in the U.S., management believes that with the exception of carryforwards in certain states it is more likely than not the Company will realize the benefits of these deductible differences.  The Company has established valuation allowances against $56.1 million of loss carryforwards in the states where activity does not support the deferred tax asset.

Based upon the Company’s history of losses in certain non-U.S. jurisdictions, management believes it is more likely than not the Company will not realize the benefits of certain foreign carryforwards and has established valuation allowances for substantial portions of its foreign deferred tax assets.

The following table sets forth changes in the total gross unrecognized tax benefit liabilities, including accrued interest, for the years ended March 31, 2013, 2012, and 2011.  The entire liability, if recognized, would reduce the Company’s effective income tax rate in future periods.

(dollars in thousands)	2013		2012			2011
Balance at beginning of period	$	3,109	$	3,043		$	6,379
Additions based on tax positions related to the current year	342		189			360
Reduction due to expiration of statute of limitations	—		(94		)	(3,460		)
Adjustments to tax positions taken in prior years	195		(29		)	(236		)
Balance at end of period included in other liabilities	$	3,646	$	3,109		$	3,043

The Company reports accrued interest and penalties related to unrecognized tax benefits in income tax expense.  For the fiscal year ended March 31, 2013, the Company recognized $0.1 million of tax-related interest expense and penalties and had $0.6 million of accrued interest and penalties at March 31, 2013.  The Company expects that up to $3.1 million of the above balance could potentially be reversed within the next twelve months.

The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions.  The Company’s subsidiaries also file tax returns in various foreign jurisdictions in which it operates.  In the U.S., the statute of limitations for Internal Revenue Service examinations remains open for the Company’s federal income tax returns for fiscal years subsequent to 2009. The status of state and local and foreign tax examinations varies by jurisdiction.  The Company does not anticipate any material adjustments to its financial statements resulting from tax examinations currently in progress.