Schedule II Valuation and Qualifying Accounts

12 Months Ended

Apr. 30, 2012

Schedule II
Valuation and Qualifying Accounts
(in thousands)

	Balance at Beginning of Year		Additions		Deductions			Balance at End of Year

Year ended April 30, 2010
Allowance for doubtful accounts	$	289	$	—	$	(39	)	$	250
Reduction in force allowance	$	430	$	667	$	(450	)	$	217
Deferred tax asset valuation allowance(1)	$	69,061	$	5,180	$	—		$	74,241
Year ended April 30, 2011
Allowance for doubtful accounts	$	250	$	—	$	(1	)	$	249
Reduction in force allowance	$	217	$	90	$	(265	)	$	42
Deferred tax asset valuation allowance(1)	$	74,241	$	3,910	$	—		$	78,151
Year ended April 30, 2012
Allowance for doubtful accounts	$	249	$	—	$	(183	)	$	66
Reduction in force allowance	$	42	$	130	$	(167	)	$	5
Deferred tax asset valuation allowance(1)	$	78,151	$	2,458	$	—		$	80,609

(1): Based on the level of recent financial losses and projections for future taxable income over the periods that the Company's deferred tax assets are deductible, the Company determined that it was no longer more likely than not that certain of its deferred tax assets were expected to be realized and therefore established a valuation allowance on deferred tax assets in fiscal 2008 totaling $59.1 million. In fiscal 2012, 2011 and 2010, the Company increased its valuation allowance by approximately $2.5 million, $3.9 million and $5.2 million, respectively, related to incremental deferred tax assets generated in fiscal 2012, 2011 and 2010.

DITECH NETWORKS INC 10-K