Notes To Consolidated Statements


NOTE 8:  INCOME TAXES

The provision for taxes on income consists of:
Years ended March 31,
In thousands 1997 1996 1995
Federal:
Current $40,901 $64,917 $34,698
Deferred (200) (7,004) (5,009)
40,701 57,913 29,689
State:
Current 12,073 10,343 6,748
Deferred (1,483) (363) (1,167)
10,590 9,980 5,581
Foreign:
Current 4,091 1,555 297
Total $55,382 $69,448 $35,567

The tax benefits associated with the disqualifying dispositions of stock options or employee stock purchase plan shares reduce taxes currently payable by $16.7 million, $7.9 million and $3.5 million for 1997, 1996, and 1995, respectively. Such benefits are credited to additional paid-in capital when realized. Pretax income from foreign operations was $36.1 million and $11.5 million for fiscal years 1997 and 1996 while fiscal year 1995 had a loss of $.2 million. Unremitted foreign earnings that are considered to be permanently invested outside the United States and on which no deferred taxes have been provided, accumulated to approximately $14.8 million. The residual U.S. tax liability, if such amounts were remitted, would be approximately $3.7 million.

The provision for income taxes reconciles to the amount obtained by applying the Federal statutory income tax rate to income before provision for taxes as follows:
Years ended March 31,
In thousands 1997 1996 1995
Income before provision for taxes $165,758 $170,902 $94,845
Federal statutory tax rate 35% 35% 35%
Computed expected tax $ 58,016 $ 59,816 $33,196
State taxes net of federal benefit 6,884 6,487 3,627
Tax exempt interest (3,278) (2,552) (1,155)
Write-off of NeoCAD in-process technology -- 7,069 --
Foreign earnings at lower tax rates (2,478) (1,057) --
Research and development tax credit (2,522) -- --
Other (1,240) (315) (101)
Provision for taxes on income $ 55,382 $ 69,448 $35,567
The major components of deferred tax assets and liabilities consist of the following:
Years ended March 31,
In thousands 1997 1996 1995
Deferred tax assets:
Inventory valuation differences $12,471 $ 3,887 $ 3,393
Deferred income on shipments to distributors 15,808 15,917 9,232
Nondeductible accrued expenses 7,568 7,778 6,245
Other 3,156 2,773 1,000
Total 39,003 30,355 19,870
Deferred tax liabilities:
Depreciation and amortization (4,026) (3,082) 1,524
Unremitted foreign earnings (7,601) (1,876) --
Other (716) (264) (483)
Total net deferred tax assets $26,660 $25,133 $20,911

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