13.INCOME TAXES:

Total income tax expense (benefit) was allocated as follows (dollars in thousands):

	2015			2014			2013
Earnings (loss) from continuing operations	$	(2,832	)	$	29,627		$	32,649
Earnings from discontinued operations	—			—			409
Stockholders’ equity:
Tax impact of stock options, warrants and restricted stock	(4,645		)	(11,295		)	(357		)
	$	(7,477	)	$	18,332		$	32,701

Income tax expense (benefit) attributable to earnings (loss) from continuing operations consists of (dollars in thousands):

	2015			2014			2013
Current:
U.S. Federal	$	6,781		$	23,506		$	32,782
Non-U.S.	192			928			239
State	(116		)	3,096			3,138
	6,857			27,530			36,159
Deferred:
U.S. Federal	(5,462		)	(5,436		)	(3,874		)
Non-U.S.	326			7,641			(506		)
State	(4,553		)	(108		)	870
	(9,689		)	2,097			(3,510		)
Total	$	(2,832	)	$	29,627		$	32,649

Earnings (loss) before income tax attributable to U.S. and non-U.S. continuing operations consist of (dollars in thousands):

	2015			2014			2013
U.S.	$	4,065		$	45,388		$	89,791
Non-U.S.	(16,044		)	(4,769		)	(1,317		)
Total	$	(11,979	)	$	40,619		$	88,474

Earnings (loss) before income taxes, as shown above, are based on the location of the entity to which such earnings (loss) are attributable. However, since such earnings (loss) may be subject to taxation in more than one country, the income tax provision shown above as U.S. or non-U.S. may not correspond to the earnings (loss) shown above.

Below is a reconciliation of income tax expense computed using the U.S. federal statutory income tax rate of 35% of earnings (loss) before income taxes to the actual provision for income taxes (dollars in thousands) for continuing operations:

	2015			2014			2013
Computed expected tax expense	$	(4,193	)	$	14,217		$	30,966
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal benefit	1,543			1,845			1,631
Research and other tax credits	(6,369		)	(5,251		)	(1,408		)
Impairment of goodwill and intangibles not deductible for tax	—			5,368			—
Share-based compensation	2,276			—			—
Non-U.S. subsidiaries taxed at other than 35%	3,959			5,130			1,948
Adjustment to valuation allowances	(776		)	7,604			726
Other, net	728			714			(1,214		)
	$	(2,832	)	$	29,627		$	32,649

In fiscal 2014, the Company recorded $7.7 million in valuation allowances due to a change in management’s assessment of the realizability of deferred tax assets in certain foreign jurisdictions.

Below is a reconciliation of income tax expense computed using the U.S. federal statutory income tax rate of 35% of earnings before income taxes to the actual provision for income taxes for discontinued operations (dollars in thousands):

	2015			2014			2013
Computed expected tax expense	$	(659	)	$	(766	)	$	596
Increase (reduction) in income taxes resulting from:
Non-U.S. subsidiaries taxed at other than 35%	659			632			(187		)
Adjustment to valuation allowances	—			134			—
	$	—		$	—		$	409

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at March 31, 2015 and 2014 are presented below (dollars in thousands). In accordance with income tax accounting standards, as of March 31, 2015, the Company has not recognized deferred income taxes on approximately $32.4 million of undistributed earnings of foreign subsidiaries that are indefinitely reinvested outside the respective parent’s country. Calculation of the deferred income tax related to these earnings is not practicable.

	2015			2014
Deferred tax assets:
Accrued expenses	$	14,394		$	10,606
Deferred revenue	4,065			3,859
Net operating loss and tax credit carryforwards	61,569			43,568
Share-based compensation	12,170			4,219
Other	6,838			6,192
Total deferred tax assets	99,036			68,444
Less valuation allowance	(50,598		)	(43,436		)
Net deferred tax assets	48,438			25,008
Deferred tax liabilities:
Intangible assets	$	(97,608	)	$	(70,892	)
Capitalized software costs	(17,165		)	(20,398		)
Property and equipment	(8,678		)	(11,074		)
Total deferred tax liabilities	(123,451		)	(102,364		)
Net deferred tax liabilities	$	(75,013	)	$	(77,356	)

At March 31, 2015, the Company has net operating loss carryforwards of approximately $26.6 million and $105.0 million for U.S. federal and state income tax purposes, respectively. These net operating loss carryforwards expire in various amounts from 2016 through 2032. The Company has foreign net operating loss carryforwards of approximately $129.8 million. Of this amount, $126.8 million do not have expiration dates. The remainder expires in various amounts through 2023. The Company has state credit carryforwards of $12.1 million of which $2.0 million will be credited to additional paid-in capital when realized. Of the credits, $2.6 million will not expire. The remainder expires in various amounts from 2023 to 2024.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Based upon the Company’s history of profitability and taxable income and the reversal of taxable temporary differences in the U.S., management believes that with the exception of carryforwards in certain states it is more likely than not the Company will realize the benefits of these deductible differences. The Company has established valuation allowances against $8.0 million of deferred tax assets related to loss and credit carryforwards in the states where activity does not support the deferred tax asset.

Based upon the Company’s history of losses in certain non-U.S. jurisdictions, management believes it is more likely than not the Company will not realize the benefits of certain foreign carryforwards and has established valuation allowances in the amount of $42.6 million against substantially all of its foreign deferred tax assets.

The following table sets forth changes in the total gross unrecognized tax benefits for the years ended March 31, 2015, 2014 and 2013.

(dollars in thousands)	2015			2014			2013
Balance at beginning of period	$	2,457		$	3,646		$	3,109
Additions based on tax positions related to the current year	4,339			902			342
Additions due to acquisition	2,887			—			—
Reduction due to expiration of statute of limitations	(181		)	(3,037		)	—
Adjustments to tax positions taken in prior years	209			946			195
Balance at end of period	$	9,711		$	2,457		$	3,646

The total amount of gross unrecognized tax benefits as of March 31, 2015 was $9.7 million, of which $7.9 million would reduce the Company’s effective tax rate in future periods if and when realized. The Company reports accrued interest and penalties related to unrecognized tax benefits in income tax expense. For the fiscal year ended March 31, 2015, the Company recognized $0.1 million of tax-related interest expense and penalties and had $0.3 million of accrued interest and penalties at March 31, 2015. It is reasonably possible that a reduction of up to $1.3 million of unrecognized tax benefits may occur within the next 12 months. Depending on the nature of the settlement or expiration of statutes of limitations, the reduction of unrecognized tax benefits may affect the Company’s income tax provision and therefore reduce its effective income tax rate.

The Company files a consolidated U.S. federal income tax return and tax returns in various state and local jurisdictions. The Company’s subsidiaries also file tax returns in various foreign jurisdictions in which it operates. In the U.S., the statute of limitations for Internal Revenue Service examinations remains open for the Company’s federal income tax returns for fiscal years subsequent to 2011. The status of state and local and foreign tax examinations varies by jurisdiction. The Company does not anticipate any material adjustments to its financial statements resulting from tax examinations currently in progress.