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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2011
Income Taxes |
Income Taxes |
9. Income Taxes Our income (loss) from continuing operations before income taxes in the accompanying Consolidated Statements of Operations consists of (in thousands):
|  | Year ended December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2009 |
Domestic |  | $ | 230,204 |  | $ | 260,268 |  | $ | (3,425 | )
Foreign |  |  | 41,882 |  |  | 36,413 |  |  | 4,206 |
|  | $ | 272,086 |  | $ | 296,681 |  | $ | 781 |
Significant components of the provision for income taxes from continuing operations are presented below (in thousands):
|  | Year ended December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2009 |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 59,921 |  | $ | 42,324 |  | $ | (344 | )
Foreign |  |  | 10,714 |  |  | 7,720 |  |  | 1,879 |
State and local |  |  | 805 |  |  | 5,215 |  |  | 799 |
Total current provision for income taxes |  |  | 71,440 |  |  | 55,259 |  |  | 2,334 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | 10,454 |  |  | (32,033 | ) |  | 940 |
Foreign |  |  | (1,073 | ) |  | 239 |  |  | (273 | )
State and local |  |  | 763 |  |  | (3,960 | ) |  | (443 | )
Total deferred (benefit) provision for income taxes |  |  | 10,144 |  |  | (35,754 | ) |  | 224 |
Total provision for income taxes |  | $ | 81,584 |  | $ | 19,505 |  | $ | 2,558 |
The following is a reconciliation of the income tax provision (benefit) computed using the Federal statutory rate to our actual income tax provision (in thousands):
|  | Year ended December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |  | 2009 |
Income tax provision (benefit) at U.S. statutory rates |  | $ | 95,231 |  | $ | 103,838 |  | $ | (4,053 | )
State income tax expense (benefit) (net of federal impact) |  |  | 1,616 |  |  | 6,379 |  |  | 188 |
Nondeductible expenses |  |  | (749 | ) |  | 333 |  |  | 145 |
Noncontrolling interest |  |  | — |  |  | — |  |  | 28 |
Equity compensation |  |  | — |  |  | — |  |  | 1,678 |
Domestic production activities deduction |  |  | (4,581 | ) |  | (6,365 | ) |  | — |
Nondeductible compensation |  |  | 841 |  |  | 2,840 |  |  | 826 |
Research and development tax credit |  |  | (4,675 | ) |  | (1,823 | ) |  | (1,855 | )
Net change in valuation allowance |  |  | 121 |  |  | (83,079 | ) |  | 5,110 |
Change in accrual for unrecognized tax benefits |  |  | 824 |  |  | (1,076 | ) |  | (4,114 | )
Foreign tax rate differential |  |  | (5,225 | ) |  | (5,280 | ) |  | 5,450 |
Other |  |  | (1,819 | ) |  | 3,738 |  |  | (845 | )
|  | $ | 81,584 |  | $ | 19,505 |  | $ | 2,558 |
During 2011, the Company recorded an income tax benefit of $29.4 million relating to discontinued operations compared to the $45.2 million income tax expense from discontinued operations in the prior which was reported in accordance with the intraperiod tax allocation provisions. In addition, the Company recorded a current tax benefit of $10.4 million related to equity-based compensation which was credit to additional paid-in capital compared to $23.3 million tax benefit recorded in the prior year. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in thousands):
|  | December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |
Deferred tax assets: |  |  |  |  |  |  |
Inventory valuation |  | $ | 5,468 |  | $ | 8,999 |
Domestic net operating loss carry forwards |  |  | 1,082 |  |  | 1,219 |
Tax credit carry forwards |  |  | 3,015 |  |  | 9,961 |
Foreign net operating loss carry forwards |  |  | 89 |  |  | 147 |
Warranty and installation accruals |  |  | 3,044 |  |  | 2,742 |
Equity compensation |  |  | 5,821 |  |  | 3,655 |
Other accruals |  |  | 2,373 |  |  | 2,063 |
Depreciation |  |  | — |  |  | 1,325 |
Other |  |  | 1,636 |  |  | 1,890 |
Total deferred tax assets |  |  | 22,528 |  |  | 32,001 |
Valuation allowance |  |  | (1,765 | ) |  | (1,644 | )
Net deferred tax assets |  |  | 20,763 |  |  | 30,357 |
Deferred tax liabilities: |  |  |  |  |  |  |
Purchased intangible assets |  |  | 9,818 |  |  | 4,854 |
Convertible debt discount |  |  | — |  |  | 1,663 |
Undistributed earnings |  |  | 974 |  |  | 370 |
Depreciation |  |  | 4,115 |  |  | — |
Other |  |  | — |  |  | 264 |
Total deferred tax liabilities |  |  | 14,907 |  |  | 7,151 |
Net deferred taxes |  | $ | 5,856 |  | $ | 23,206 |
A provision has not been made at December 31, 2011 for U.S. or additional foreign withholding taxes on approximately $72.5 million of undistributed earnings of our foreign subsidiaries because it is the present intention of management to permanently reinvest the undistributed earnings of our foreign subsidiaries in China, Korea, Japan, Malaysia, Singapore and Taiwan. As it is our intention to reinvest those earnings permanently, it is not practicable to estimate the amount of tax that might be payable if they were remitted. We have provided deferred income taxes and future withholding taxes on the earnings that we anticipate will be remitted. Our valuation allowance of approximately $1.8 million at December 31, 2011 increased by approximately $0.1 million during the year then ended and relates primarily to state and local tax attributes for which we could not conclude were realizable on a more-likely-than-not basis. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | December 31, |
--- | --- | --- | ---
|  | 2011 |  | 2010 |
Beginning balance as of December 31 |  | $ | 3,660 |  | $ | 1,357 |
Additions for tax positions related to current year |  |  | 1,069 |  |  | 1,227 |
Reductions for tax positions relating to current year |  |  | — |  |  | — |
Additions for tax positions relating to prior years |  |  | 1,209 |  |  | 1,736 |
Reductions for tax positions relating to prior years |  |  | (422 | ) |  | (478 | )
Reductions due to the lapse of the applicable statute of limitations |  |  | (586 | ) |  | (17 | )
Settlements |  |  | (182 | ) |  | (165 | )
Ending balance as of December 31 |  | $ | 4,748 |  | $ | 3,660 |
The Company does not anticipate that its uncertain tax position will change significantly within the next twelve months. Of the amounts reflected in the table above at December 31, 2011, the entire amount if recognized would reduce our effective tax rate. It is our policy to recognize interest and penalties related to income tax matters in income tax expense. The total accrual for interest and penalties related to unrecognized tax benefits was approximately $0.2 million and $0.3 million as of December 31, 2011 and 2010, respectively. We or one of our subsidiaries file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. All material federal income tax matters have been concluded for years through 2006 subject to subsequent utilization of net operating losses generated in such years. None of our federal tax returns are currently under examination. All material state and local income tax matters have been reviewed through 2008 with two states currently under examination for open tax years between 2007 and 2010. The majority of our foreign jurisdictions have been reviewed through 2009 with only a few jurisdictions having open tax years between 2006 and 2009. Principally all our foreign jurisdictions remain open with respect to the 2010 tax year.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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