INCOME TAXES

12 Months Ended

Mar. 31, 2012

INCOME TAXES

INCOME TAXES

6. INCOME TAXES

Income before income taxes for the years ended March 31 were as follows:

	Year Ended March 31
	2012		2011		2010
Domestic	$	10,759	$	54,138	$	10,160
Foreign	9,699		11,196		7,864
Income before taxes	$	20,458	$	65,334	$	18,024

The provision for income taxes is comprised of the following:

	Year Ended March 31
	2012			2011		2010
Current
Federal	$	1,206		$	7,909	$	8,098
State	96			1,406		837
Foreign	2,382			2,455		1,617
Current income taxes	3,684			11,770		10,552
Deferred
Federal	2,613			9,785		(5,548		)
State	255			2,215		(1,552		)
Foreign	(196		)	152		484
Deferred income taxes	2,672			12,152		(6,616		)
Income tax expense	$	6,356		$	23,922	$	3,936

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

	Year Ended March 31
	2012			2011			2010
Provision at the federal statutory rate	$	7,160		$	22,866		$	6,309
Non-deductible expenses	971			1,309			961
Adjustment to unrecognized tax benefits	(581		)	(1,294		)	(1,007		)
State income taxes, net of federal income tax effect	364			2,590			(505		)
Foreign income taxed at other rates	(1,214		)	(1,383		)	(651		)
Benefit of domestic production deduction	(64		)	(525		)	(645		)
Other	(280		)	359			(526		)
Income tax expense	$	6,356		$	23,922		$	3,936

At March 31, 2012 and 2011, a current income tax receivable of $4,749 and $2,907 was included in prepaid expenses, primarily relating to federal and state overpayments for 2012 and federal, state and foreign overpayments for 2011.

Deferred income taxes reflect the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts as measured based on enacted tax laws and regulations. As of March 31, 2012 and 2011, the Company had tax benefits relating to various state net operating losses and other tax credit carryforwards, net of federal benefit, of $3,625 and $3,156. The losses and credits expire in years 2012 through 2031. The Company records a valuation allowance, when appropriate, to adjust deferred tax asset balances to the amount the Company expects to realize. The Company considers the history of taxable income and expectations of future taxable income, among other factors, in assessing the potential need for a valuation allowance. As of March 31, 2012 and 2011, a valuation allowance of ($2,538) and ($2,037) was recorded related to certain deferred tax assets.

Deferred U.S. income taxes and foreign withholding taxes are not provided on the excess of the investment value for financial reporting over the tax basis of investments in foreign subsidiaries, because such excess is considered to be permanently reinvested in those operations. If earnings were repatriated, the Company would need to accrue and pay taxes. The Company has no intention of repatriating earnings. At March 31, 2012, approximately $3,849 of U.S. taxes and foreign withholding taxes would be due if the aggregate unremitted earnings of $37,705 were distributed.

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

	March 31
	2012			2011
Deferred income tax assets
Goodwill and intangibles(1)	$	21,096		$	23,293
Litigation reserve	78			67
Compensation and benefit accruals	12,172			5,132
Stock based compensation	6,892			6,188
Other liabilities(1)	2,932			3,630
Net operating losses and credits(1)	3,625			3,156
Accounts receivable and inventories	452			586
Other	—			453
Total deferred income tax assets	47,247			42,505
Valuation allowance(1)	(2,538		)	(2,037		)
Net deferred income tax assets	$	44,709		$	40,468
Deferred income tax liabilities
Property and equipment	$	79,166		$	73,671
Prepaid expenses(2)	2,696			1,639
Other(2)	346			—
Total deferred income tax liabilities	$	82,208		$	75,310

(1)These deferred income tax assets are long-term in nature and therefore are netted against long-term deferred income tax liabilities for presentation in the accompanying consolidated balance sheets.

(2)These deferred tax liabilities are current in nature and therefore netted against current deferred income tax assets for presentation in the accompanying consolidated balance sheets.

As of March 31, 2012, the balance of unrecognized tax benefits was $12,290. Of the unrecognized tax benefits at March 31, 2012, $11,667, if recognized, would decrease the Company’s effective income tax rate and increase net income. The unrecognized tax benefits relate to certain tax deductions claimed on federal and state tax returns for which the ultimate outcome is uncertain.

In the year ended March 31, 2012, the reserve for unrecognized tax benefits declined $1,529.  Of this amount, $2,848 resulted in a net decrease in tax expense.  The decrease in the reserve for unrecognized tax benefits in fiscal year 2012 primarily relates to deductions claimed on the federal and state tax returns for which the ultimate outcome is uncertain, more than offset by reserve releases due to the expiration of various statutes of limitations.  During fiscal year 2011, the reserve for unrecognized tax benefits declined $910.  Of this amount, $1,294 resulted in a net decrease in tax expense.  The decrease in the reserve for unrecognized tax benefits in fiscal year 2011 primarily relates to deductions claimed on the federal and state tax returns for which the ultimate outcome is uncertain, more than offset by reserve releases due to the expiration of various statutes of limitations.

The Company’s federal income tax returns for the tax years after 2008 remain subject to examination. The various states in which the Company is subject to income tax are generally open for the tax years after 2007.

The Company classifies interest expense and any related penalties related to income tax uncertainties as a component of income tax expense. For the year-ended March 31, 2012, the Company recognized an increase in interest expense of $36. Accrued interest and penalties of $1,826 and $1,790 relate to income tax uncertainties that were recognized as a component of other noncurrent liabilities at March 31, 2012 and March 31, 2011, respectively.

The Company’s unrecognized tax benefit activity for the fiscal year ended March 31, 2012 and March 31, 2011, was as follows:

	March 31
	2012			2011
Unrecognized tax benefit at beginning of year	$	13,819		$	14,729
Decreases for tax positions in prior periods	(202		)	(238		)
Additions for tax positions in current periods	1,539			1,798
Settlements/audits	—			(338		)
Lapse of statute of limitations	(2,866		)	(2,132		)
Unrecognized tax benefit at end of year	$	12,290		$	13,819