Note 10 — Income Taxes:

An analysis of the components of income before income taxes is presented below:

The provision for income taxes related to income before income taxes consists of:

The reconciliation of the provision calculated using the U.S. federal tax rate with the provision for income taxes presented in the financial statements is as follows:

The net deferred income tax liability recorded in the Consolidated Balance Sheets results from differences between financial statement and tax reporting of income and deductions. A summary of the composition of the Company’s net deferred income tax liability follows:

The net deferred income tax liability is presented in the Consolidated Balance Sheets as follows:

Deferred income taxes include the impact of state investment tax credits of $372, which expire from 2013 to 2026 and state investment tax credits of $325 with an unlimited carryforward period.

In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the consideration of the weight of both positive and negative evidence, management has determined that a portion of the deferred tax assets as of March 31, 2012 related to certain state investment tax credits and foreign net operating losses will not be realized.

The Company files federal and state income tax returns in several domestic and international jurisdictions. In most tax jurisdictions, returns are subject to examination by the relevant tax authorities for a number of years after the returns have been filed. During fiscal 2012, the Company reached a resolution with the U.S. Internal Revenue Service (the “IRS”) with regard to the research and development tax credits claimed during tax years 2006 through 2008. As a result of the resolution, the tax credits claimed were reduced by approximately 40% and interest was assessed on the underpayment of tax. Prior to the resolution, the Company had recorded an unrecognized tax benefit for 20% of the tax credit claimed, or $374. The Company recorded an additional unrecognized tax benefit of $374 related to this resolution. In fiscal 2012, the IRS completed its examination for tax years 2009 and 2010 and proposed an adjustment, plus interest, to disallow all of the research and development tax credits claimed by the Company in those tax years. The Company filed a protest to appeal the adjustment. In May 2012, the Company reached a resolution with the IRS reducing the research and development tax credits claimed during tax years 2009 and 2010 by approximately 30%.

The cumulative tax benefit related to the research and development tax credit for the tax years ended March 31, 1999 through March 31, 2008 and March 31, 2009 through March 31, 2012 was $1,871 and $781, respectively. The liability for unrecognized tax benefits related to this tax position was $905 and $477 at March 31, 2012 and 2011, respectively, which represents management’s estimate of the potential resolution of this issue. Any additional impact on the Company’s income tax liability cannot be determined at this time.

The Company is subject to examination in state and international tax jurisdictions for tax years 2007 through 2011 and tax years 2009 through 2011, respectively. It is the Company’s policy to recognize any interest related to uncertain tax positions in interest expense and any penalties related to uncertain tax positions in selling, general and administrative expense. During fiscal 2012, fiscal 2011 and fiscal 2010, the Company recorded $259, $87 and $32, respectively, for interest related to its uncertain tax positions. No penalties related to uncertain tax positions were recorded in fiscal 2012, fiscal 2011 and fiscal 2010.

The following table summarizes the changes to the unrecognized tax benefit:

With regard to the IRS examination for tax year 2010, the IRS accepted a company tax position that it had previously disallowed thereby causing the Company’s uncertain tax positions to decrease in fiscal 2012 by $888.