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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.