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Income Taxes | 12 Months Ended
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Mar. 31, 2012
Income Taxes [Abstract] |
INCOME TAXES | INCOME TAXES 10. INCOME TAXES For the year ended March 31, income from continuing operations before income taxes consisted of the following:
(In thousands) |  | 2012 |  |  | 2011 |  |  | 2010 |
(Loss) income before income taxes |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | (42,946 | ) |  | $ | (21,664 | ) |  | $ | (16,129 | )
Foreign |  |  | 700 |  |  |  | 1,109 |  |  |  | 952 |
Total loss from continuing operations before income taxes |  | $ | (42,246 | ) |  | $ | (20,555 | ) |  | $ | (15,177 | )
For the year ended March 31, income tax (benefit) expense consisted of the following:
(In thousands) |  | 2012 |  |  | 2011 |  |  | 2010 |
Income tax (benefit) expense |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (8,133 | ) |  | $ | (2,022 | ) |  | $ | (12,277 | )
State and local |  |  | 31 |  |  |  | (250 | ) |  |  | 912 |
Foreign |  |  | 33 |  |  |  | 243 |  |  |  | 435 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 61 |  |  |  | 3,874 |  |  |  | 3,383 |
State and local |  |  | 10 |  |  |  | 575 |  |  |  | — |
Foreign |  |  | (9 | ) |  |  | — |  |  |  | — |
Total (benefit) income tax expense |  | $ | (8,007 | ) |  | $ | 2,420 |  |  | $ | (7,547 | )
The following table presents the principal components of the difference between the effective tax rate for continuing operations to the U.S. federal statutory income tax rate for the years ended March 31:
(In thousands) |  | 2012 |  |  | 2011 |  |  | 2010 |
Income tax (benefit) provision at the statutory rate of 35% |  | $ | (14,786 | ) |  | $ | (7,194 | ) |  | $ | (5,312 | )
Provision (benefit) for state taxes |  |  | 73 |  |  |  | 18 |  |  |  | 29 |
Impact of foreign operations |  |  | 279 |  |  |  | 200 |  |  |  | (1,216 | )
Nontaxable proceeds |  |  | — |  |  |  | (723 | ) |  |  | (805 | )
Note settlement |  |  | — |  |  |  | — |  |  |  | 1,652 |
Change in valuation allowance |  |  | 8,345 |  |  |  | 9,431 |  |  |  | (2,780 | )
Change in liability for unrecognized tax benefits |  |  | (1,536 | ) |  |  | (311 | ) |  |  | (295 | )
Meals & entertainment |  |  | 177 |  |  |  | 628 |  |  |  | 283 |
Other |  |  | (559 | ) |  |  | 371 |  |  |  | 897 |
Expense (benefit) for income taxes |  | $ | (8,007 | ) |  | $ | 2,420 |  |  | $ | (7,547 | )
Our tax provision includes a provision for income taxes in certain foreign jurisdictions where subsidiaries are profitable, but only a minimal benefit is reflected related to U.S. and certain foreign tax losses due to the uncertainty of the ultimate realization of future benefits from these losses. The 2012 tax benefit differs from the statutory rate primarily due to the intra-period tax allocation rules associated with the discontinued operations and recognition of net operating losses as deferred tax assets were offset by increases in the valuation allowance. Other items effecting the rate in the current year include foreign and state taxes, a decrease in unrecognized tax benefits attributable to expiration of statute of limitations, and other U.S. permanent book to tax differences. The 2011 tax provision differs from the statutory rate primarily due to the intra-period tax allocation rules associated with the discontinued operations and recognition of net operating losses as deferred tax assets were offset by increases in the valuation allowance. Other items effecting the rate in 2011 non-taxable life insurance proceeds, a decrease in unrecognized tax benefits attributable to expiration of statute of limitations, and other U.S. permanent book to tax differences . The 2010 tax benefit differs from the statutory rate primarily due to the intra-period tax allocation rules associated with the discontinued operations. Other items effecting the rate include non-taxable life insurance proceeds and other U.S. permanent book to tax differences. The rate is also negatively impacted as a result of an inter-company loan settlement which resulted in a net zero rate impact when viewed with discontinued operations, but an unfavorable impact in continuing operations. Deferred tax assets and liabilities as of March 31, 2012 and 2011 are as follows:
(In thousands) |  | 2012 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued liabilities |  | $ | 4,433 |  |  | $ | 4,689 |
Allowance for doubtful accounts |  |  | 180 |  |  |  | 216 |
Inventory valuation reserve |  |  | 437 |  |  |  | 712 |
Restructuring reserve |  |  | 1,228 |  |  |  | 288 |
Federal losses and credit carryforwards |  |  | 54,047 |  |  |  | 6,913 |
Foreign net operating losses |  |  | 12,149 |  |  |  | 364 |
State losses and credit carryforwards |  |  | 332 |  |  |  | 3,072 |
Deferred compensation |  |  | 2,908 |  |  |  | 4,645 |
Deferred revenue |  |  | 19 |  |  |  | 18 |
Goodwill and other intangible assets |  |  | 6,090 |  |  |  | 9,225 |
Other |  |  | 130 |  |  |  | 4,198 |
|  |  | 81,953 |  |  |  | 34,340 |
Less: valuation allowance |  |  | (78,682 | ) |  |  | (33,786 | )
Total |  |  | 3,271 |  |  |  | 554 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment & software amortization |  |  | 3,261 |  |  |  | 516 |
Indefinite-lived goodwill & intangible assets |  |  | 4,043 |  |  |  | 3,971 |
Other |  |  | — |  |  |  | 38 |
Total |  |  | 7,304 |  |  |  | 4,525 |
Total deferred tax liabilities |  | $ | (4,033 | ) |  | $ | (3,971 | )
At March 31, 2012, we had $153.4 million of a federal net operating loss carryforward that expires, if unused, in fiscal year 2032. Included in this net operating loss is $0.6 million of excess income tax benefit related to restricted stock and the exercise of stock options. Our Hong Kong subsidiary has $2.0 million of net operating loss carryforwards that can be carried forward indefinitely. At March 31, 2012 we also had $201.7 million of state net operating loss carryforwards that expire, if unused, in fiscal years 2013 through 2032. We recorded valuation allowances related to certain deferred income tax assets due to the uncertainty of the ultimate realization of the future benefits from those assets. At March 31, 2012, the total valuation allowance against deferred tax assets of $78.7 million was mainly comprised of a valuation allowance of $78.4 million for federal and state deferred tax assets, and a valuation allowance of $0.3 million associated with deferred tax assets in Hong Kong that, in all likelihood, will not be realized. In assessing the realizability of deferred tax assets, management considers whether it is more-likely-than-not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected taxable income, and tax planning strategies in making this assessment. In order to fully realize the deferred tax assets, we will need to generate future taxable income before the expiration of the deferred tax assets governed by the tax code. Based on the level of historical taxable income over the periods for which the deferred tax assets are deductible, management believes that it is more-likely-than-not that we will not realize the benefits of these deductible differences. We did not provide taxes on undistributed earnings of foreign subsidiaries as such earnings are intended to be reinvested indefinitely. Quantification of the deferred tax liabilities, if any, associated with these undistributed earnings is not practicable. We use the with-and-without approach for ordering tax benefits derived from the share-based payment awards. Using the with-and-without approach, actual income taxes payable for the period are compared to the amount of tax payable that would have been incurred absent the deduction for employee share-based payments in excess of the amount of compensation cost recognized for financial reporting. As a result of this approach, tax net operating loss carryforwards not generated from share-based payments in excess of cost recognized for financial reporting are considered utilized before the current period’s share-based deduction. We did not recognize any tax benefits during 2012 and 2011 for stock-based compensation. We recorded a liability for unrecognized tax positions. The aggregate changes in the balance of our gross unrecognized tax benefits were as follows for the years ended March 31:
(In thousands) |  | 2012 |  |  | 2011 |  |  | 2010 |
Balance at April 1 |  | $ | 4,123 |  |  | $ | 4,456 |  |  | $ | 5,651 |
Additions: |  |  |  |  |  |  |  |  |  |  |  |
Relating to positions taken during current year |  |  | 1 |  |  |  | 879 |  |  |  | 53 |
Relating to positions taken during prior year |  |  | 47 |  |  |  | 260 |  |  |  | 629 |
Reductions: |  |  |  |  |  |  |  |  |  |  |  |
Relating to tax settlements |  |  | (293 | ) |  |  | (678 | ) |  |  | (1,084 | )
Relating to positions taken during prior year |  |  | (47 | ) |  |  | (164 | ) |  |  | (133 | )
Relating to lapse in statute |  |  | (958 | ) |  |  | (630 | ) |  |  | (660 | )
Balance at March 31 |  | $ | 2,873 |  |  | $ | 4,123 |  |  | $ | 4,456 |
As of March 31, 2012, we had a liability of $2.9 million related to uncertain tax positions, the recognition of which would affect our effective income tax rate. Although the timing and outcome of tax settlements are uncertain, it is reasonably possible that during the next 12 months a reduction in unrecognized tax benefits may occur in the range of zero to $0.2 million based on the outcome of tax examinations and as a result of the expiration of various statutes of limitations. We are routinely audited and are currently under examination in multiple state jurisdictions, other changes could occur in the amount of gross unrecognized tax benefits during the next 12 months which cannot be estimated at this time. We recognize interest accrued on any unrecognized tax benefits as a component of income tax expense. Penalties are recognized as a component of general and administrative expenses. As of March 31, 2012, we had approximately $1.3 million of interest and penalties accrued. We recognize interest and penalty expense or (benefit) of $(0.6) million, less than $0.1 million and $0.3 million for the years end March 31, 2012, 2011 and 2010, respectively. As of March 31, 2012 and 2011, we had approximately $1.3 million and $2.0 million of interest and penalties accrued, respectively. In the U.S. we file consolidated federal and state income tax returns where statutes of limitations generally range from three to five years. Although we have resolved examinations with the IRS through tax year ended March 31, 2009, U.S federal tax years are open from 2006 forward due to attribute carryforwards. The statute of limitations is open from 2000 forward in certain state jurisdictions. We also file income tax returns in international jurisdictions where statutes of limitations generally range from three to seven years. Years beginning after 2007 are open for examination by certain foreign taxing authorities.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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