4. INCOME TAXES

The provision (benefit) for income taxes for the years ended March 31, 2013, 2012, and 2011 consisted of the following:

(In thousands)	2013			2012			2011
Current:
Federal	$	11,339		$	9,082		$	24,080
State	595			197			636
Foreign	22			7			22
	11,956			9,286			24,738
Deferred:
Federal	(2,743		)	1,610			(2,354		)
State	(375		)	212			(640		)
Change in valuation allowance	154			(72		)	314
	(2,964		)	1,750			(2,680		)
Provision for income taxes	$	8,992		$	11,036		$	22,058

The difference between the total expected provision for income taxes computed by applying the statutory federal income tax rate to income before provision for income taxes and the recorded provision for income taxes for the three years in the period ended March 31, 2013 is as follows:

(In thousands)	2013			2012			2011
Provision for income taxes at statutory rate	$	9,253		$	11,360		$	22,706
State tax provision (benefit) net of federal effect	143			265			(2		)
Stock based compensation	(60		)	107			616
Research tax credits	(589		)	(289		)	(432		)
Qualifying manufacturing credits	(154		)	(315		)	(1,346		)
Change in valuation allowance	154			(72		)	314
Other	245			(20		)	202
Provision for income taxes	$	8,992		$	11,036		$	22,058

The significant components of the net deferred tax assets at March 31, 2013 and 2012 are as follows:

	March 31, 2013					March 31, 2012
(In thousands)	Current		Non-current			Current		Non-current
Deferred tax assets (liabilities):
Accounts receivable and unbilled costs and fees	$	—	$	125		$	—	$	91
Inventory	248		3,935			219		2,199
Deferred revenue	—		1,778			—		1,192
Accrued vacation	558		—			668		—
Accrued warranty costs	141		—			126		—
Depreciation	—		(495		)	—		(922		)
Unearned compensation	1,738		2,573			1,836		2,577
State credit carryforwards	—		944			—		1,098
Other	470		409			480		37
Deferred income tax assets	3,155		9,269			3,329		6,272
Valuation allowance	—		(944		)	—		(1,098		)
Net deferred income taxes	$	3,155	$	8,325		$	3,329	$	5,174

As of March 31, 2013 and March 31, 2012, the Company has $1,452,000 and $1,690,000 of state credit carryforwards, respectively. Of these amounts, approximately $201,000 and $492,000 at March 31, 2013 and March 31, 2012, respectively, have unlimited carryforward and the remaining balances expire in various years through 2028.

At March 31, 2013 and March 31, 2012, the Company had a deferred tax valuation allowance of $944,000 and $1,098,000, respectively, on state credit carryforwards and other deferred tax assets for which management believes it is more-likely-than-not that realization of these assets will not occur.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ending March 31, 2010 through 2012 and for various state taxing authorities for the years ending March 31, 2007 through 2012. The Company is currently under examination for tax year ended March 31, 2011. Management does not believe that the examination will have a material impact on the Company’s financial position or results of operations.

In April 2013, the Company settled an outstanding refund receivable with the Massachusetts Department of Revenue for tax years ending March 31, 2006 through 2008 related to sales apportionment methodology. The Company received proceeds of $1,500,000 related to this settlement which is included in prepaid expenses and other current assets at March 31, 2013.