XML 50 R17.htm IDEA: XBRL DOCUMENT
v3.7.0.1

Income Taxes | 12 Months Ended
--- | ---
Mar. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes For the year ended March 31, loss before income taxes consisted of the following:
(In thousands) | 2017 |  | 2016 |  | 2015
Loss before income taxes |  |  |  |  |
United States | $ | (10,967 | ) |  | $ | (3,874 | ) |  | $ | (12,697 | )
Foreign | (518 | ) |  | 115 |  |  | 146 |
Total loss before income taxes | $ | (11,485 | ) |  | $ | (3,759 | ) |  | $ | (12,551 | )
For the year ended March 31, income tax expense (benefit) consisted of the following:
(In thousands) | 2017 |  | 2016 |  | 2015
Income tax expense (benefit) |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | 10 |  |  | $ | (2 | ) |  | $ | 25 |
State and local | 5 |  |  | (52 | ) |  | (798 | )
Foreign | 107 |  |  | 59 |  |  | 90 |
Deferred: |  |  |  |  |
Federal | 96 |  |  | 19 |  |  | (206 | )
State and local | 10 |  |  | 10 |  |  | (141 | )
Foreign | 8 |  |  | (28 | ) |  | (24 | )
Total income tax expense (benefit) | $ | 236 |  |  | $ | 6 |  |  | $ | (1,054 | )
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) | 2017 |  | 2016 |  | 2015
Income tax benefit at the statutory rate of 35% | $ | (4,019 | ) |  | $ | (1,317 | ) |  | $ | (4,405 | )
Benefit for state taxes | (142 | ) |  | (54 | ) |  | (172 | )
Impact of foreign operations | 158 |  |  | (9 | ) |  | 11 |
Indefinite life assets | 102 |  |  | 26 |  |  | — |
Officer life insurance | (6 | ) |  | (197 | ) |  | (20 | )
Change in valuation allowance | 4,007 |  |  | 1,555 |  |  | 4,241 |
Change in liability for unrecognized tax benefits | 9 |  |  | (29 | ) |  | (857 | )
Meals and entertainment | 163 |  |  | 100 |  |  | 102 |
Other | (36 | ) |  | (69 | ) |  | 46 |
Total income tax expense (benefit) | $ | 236 |  |  | $ | 6 |  |  | $ | (1,054 | )
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 2017 tax provision primarily results from state taxes, taxes withheld in foreign jurisdictions and foreign tax expense. The 2017 tax provision differs from the statutory rate primarily due to the recognition of net operating losses as deferred tax assets, which were offset by increases in the valuation allowance, state taxes and other U.S. permanent book to tax differences. The 2016 tax provision differs from the statutory rate primarily due to the recognition of net operating losses as deferred tax assets, which were offset by increases in the valuation allowance, death benefits on company owned life insurance, state taxes and other U.S. permanent book to tax differences. The 2015 tax benefit differs from the statutory rate primarily due to the recognition of net operating losses as deferred tax assets, which were offset by increases in the valuation allowance, a decrease in unrecognized benefits attributable to the expiration of statute of limitations, state taxes and other U.S. permanent book to tax differences. Deferred tax assets and liabilities as of March 31, are as follows:
(In thousands) | 2017 | 2016
Deferred tax assets: |  |
Accrued liabilities | $ | 3,892 |  | $ | 5,567 |
Allowance for doubtful accounts | 126 |  | 198 |
Inventory valuation reserve | 38 |  | 54 |
Federal losses and credit carryforwards | 64,953 |  | 59,855 |
Foreign net operating losses | 392 |  | 295 |
State losses and credit carryforwards | 9,474 |  | 9,591 |
Deferred revenue | 704 |  | 423 |
Goodwill and other intangible assets | 1,332 |  | 2,281 |
Other | 152 |  | 365 |
| 81,063 |  | 78,629 |
Less: valuation allowance | (80,013 | ) | (77,846 | )
Total | 1,050 |  | 783 |
Deferred tax liabilities: |  |
Property and equipment & software amortization | (772 | ) | (478 | )
Indefinite-lived goodwill & intangible assets | (3,459 | ) | (3,352 | )
Total | (4,231 | ) | (3,830 | )
Total deferred tax liabilities | $ | (3,181 | ) | $ | (3,047 | )
At March 31, 2017, we had $187.6 million of a federal net operating loss carryforward that expires, if unused, in fiscal years 2031 to 2037. Included in this net operating loss is $4.4 million of tax deductions in excess of recorded windfall tax benefits associated with stock-based compensation. Upon realization of the U.S. federal net operating losses, we will recognize a windfall tax benefit as an increase to additional paid-in capital. ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, amends several aspects of accounting for share-based payment transactions, including income tax consequences. We expect the impact of this guidance on our consolidated financial statements will be immaterial including our expected change in the accounting for windfall tax benefits. Our Hong Kong subsidiary has $0.3 million of net operating loss carryforwards that can be carried forward indefinitely. At March 31, 2017 we also had $130.5 million of state net operating loss carryforwards that expire, if unused, in fiscal years 2018 through 2037. 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, 2017, the total valuation allowance against deferred tax assets of $80.0 million was comprised of a valuation allowance of $79.6 million for federal and state deferred tax assets, and a valuation allowance of $0.4 million associated with deferred tax assets in Hong Kong and Malaysia. 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. We have recorded a valuation allowance offsetting substantially all of our deferred tax assets. 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. Because of our losses in current and prior periods, management believes that it is more-likely-than-not that we will not realize the benefits of these deductible differences. The amount of the valuation allowance, however, could be reduced in the near term. The exact timing will be based on the level of profitability that we are able to achieve and our visibility into future results. Our recorded tax rate may increase in subsequent periods following a valuation release. Any valuation allowance release will not affect the amount of cash paid for income taxes. The undistributed earnings of our foreign subsidiaries are not subject to U.S. federal and state income taxes unless such earnings are distributed in the form of dividends or otherwise to the extent of current and accumulated earnings and profits. The undistributed earnings of foreign subsidiaries are permanently reinvested and totaled $1.3 million and $1.0 million as of March 31, 2017 and 2016, respectively. We made the determination of permanent reinvestment on the basis of sufficient evidence that demonstrates we will invest the undistributed earnings overseas indefinitely for use in working capital, as well as foreign acquisitions and expansion. The determination of the amount of the unrecognized deferred U.S. income tax liability related to the 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 recognized tax benefits of $0, $0 and $14,000 during 2017, 2016 and 2015, respectively. 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) | 2017 |  | 2016 |  | 2015
Balance at April 1 | $ | 1,617 |  |  | $ | 1,755 |  |  | $ | 2,568 |
Reductions: |  |  |  |  |
Relating to tax settlements | — |  |  | (85 | ) |  | — |
Relating to positions taken during prior year | (604 | ) |  | — |  |  | (204 | )
Relating to lapse in statute | (25 | ) |  | (53 | ) |  | (609 | )
Balance at March 31 | $ | 988 |  |  | $ | 1,617 |  |  | $ | 1,755 |
As of March 31, 2017, we had a liability of $1.0 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 $0.1 million as a result of the expiration of various statutes of limitations. We are routinely audited and the outcome of tax examinations could also result in a reduction in unrecognized tax benefits. 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. We recognized interest and penalty expense of less than $0.1 million, expense of less than $0.1 million and benefit of $0.3 million for the years ended March 31, 2017, 2016 and 2015, respectively. As of March 31, 2017 and 2016, we had approximately $0.8 million and $0.8 million of interest and penalties accrued. 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, 2010, U.S. federal tax years are open from 2006 forward due to attribute carryforwards. The statute of limitations is open from fiscal year 2011 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.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration