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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes | Note 9—Income Taxes Income tax expense (benefit) based on income before income taxes consists of:
|  | Year ended December 31, |
(in thousands) |  | 2011 |  |  | 2010 |  |  | 2009 |
Current: |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 75 |  |  | $ | 300 |  |  | $ | (4,521 | )
State and local |  |  | 86 |  |  |  | 948 |  |  |  | 294 |
Foreign |  |  | 7,003 |  |  |  | 5,730 |  |  |  | 3,326 |
|  |  | 7,164 |  |  |  | 6,978 |  |  |  | (901 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | (16,963 | ) |  |  | (407 | ) |  |  | 1,789 |
State and local |  |  | 442 |  |  |  | (52 | ) |  |  | 355 |
Foreign |  |  | (1,470 | ) |  |  | 739 |  |  |  | (3,217 | )
|  |  | (17,991 | ) |  |  | 280 |  |  |  | (1,073 | )
|  | $ | (10,827 | ) |  | $ | 7,258 |  |  | $ | (1,974 | )
Worldwide income before income taxes consisted of the following:
|  | Year ended December 31, |
(in thousands) |  | 2011 |  |  | 2010 |  |  | 2009 |
United States |  | $ | 5,405 |  |  | $ | 27,650 |  |  | $ | 4,012 |
Foreign |  |  | 35,727 |  |  |  | 59,366 |  |  |  | 47,395 |
|  | $ | 41,132 |  |  | $ | 87,016 |  |  | $ | 51,407 |
Income tax expense (benefit) differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income taxes as a result of the following:
|  | Year ended December 31, |
(in thousands) |  | 2011 |  |  | 2010 |  |  | 2009 |
Tax at statutory rate |  | $ | 14,396 |  |  | $ | 30,456 |  |  | $ | 17,992 |
State taxes, net of federal tax effect |  |  | 343 |  |  |  | 582 |  |  |  | 422 |
Effect of foreign operations and tax incentives |  |  | (12,442 | ) |  |  | (13,021 | ) |  |  | (13,818 | )
Valuation allowance |  |  | (23,674 | ) |  |  | (10,657 | ) |  |  | (486 | )
Thailand reserve for uncertain tax benefits |  |  | 7,056 |  |  |  | — |  |  |  | — |
Settlement of foreign tax audits |  |  | (2,710 | ) |  |  | — |  |  |  | — |
Intercompany transactions |  |  | 2,801 |  |  |  | (1,321 | ) |  |  | (1,293 | )
Losses in foreign jurisdictions for which no benefit has |  |  |  |  |  |  |  |  |  |  |  |
been provided |  |  | 3,068 |  |  |  | 63 |  |  |  | 894 |
Write-off of investment in inactive foreign owned subsidiary |  |  | — |  |  |  | — |  |  |  | (2,668 | )
Revaluation loss |  |  | — |  |  |  | — |  |  |  | (2,429 | )
Other |  |  | 335 |  |  |  | 1,156 |  |  |  | (588 | )
Total income tax expense (benefit) |  | $ | (10,827 | ) |  | $ | 7,258 |  |  | $ | (1,974 | )
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
|  | December 31, |
(in thousands) |  | 2011 |  |  | 2010 |
Deferred tax assets: |  |  |  |  |  |
Carrying value of inventories |  | $ | 2,240 |  |  | $ | 1,816 |
Accrued liabilities and allowances deductible for tax purposes |  |  |  |  |  |  |  |
on a cash basis |  |  | 5,367 |  |  |  | 7,043 |
Goodwill |  |  | 14,397 |  |  |  | 18,179 |
Stock-based compensation |  |  | 7,398 |  |  |  | 6,466 |
Net operating loss carryforwards |  |  | 49,561 |  |  |  | 46,829 |
Tax credit carryforwards |  |  | 5,400 |  |  |  | 4,464 |
Other |  |  | 9,850 |  |  |  | 11,398 |
|  |  | 94,213 |  |  |  | 96,195 |
Less: valuation allowance |  |  | (42,524 | ) |  |  | (61,852 | )
Net deferred tax assets |  |  | 51,689 |  |  |  | 34,343 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Plant and equipment, due to differences in depreciation |  |  | (4,586 | ) |  |  | (4,984 | )
Other |  |  | (1,508 | ) |  |  | (1,534 | )
Gross deferred tax liability |  |  | (6,094 | ) |  |  | (6,518 | )
Net deferred tax asset |  | $ | 45,595 |  |  | $ | 27,825 |
Recorded as: |  |  |  |  |  |  |  |
Current deferred tax assets |  | $ | 8,175 |  |  | $ | 3,850 |
Non-current deferred tax assets |  |  | 37,420 |  |  |  | 23,975 |
Net deferred tax asset |  | $ | 45,595 |  |  | $ | 27,825 |
The net change in the total valuation allowance for the years ended December 31, 2011, 2010 and 2009 was a decrease of $19.3 million, $11.1 million and $2.9 million, respectively. 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. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowances as of December 31, 2011. During 2011, the Company evaluated the recoverability of its deferred tax assets using the criteria described above and concluded that the Company's projected future taxable income in the U.S. is sufficient to utilize additional net operating loss carryforwards and other deferred tax assets. As a result, the Company reduced its valuation allowance by $19.1 million in the U.S. During 2010, the valuation allowance on U.S. net deferred tax assets was reduced by $10.5 million as a result of utilizing U.S. net operating losses and other deferred tax assets during the year. As of December 31, 2011, the Company had $105.1 million in U.S. Federal operating loss carryforwards which will expire from 2022 to 2031, state operating loss carryforwards of approximately $106.5 million which will expire from 2017 to 2031, foreign operating loss carryforwards of approximately $34.4 million with indefinite carryforward periods, and foreign operating loss carryforwards of approximately $3.5 million which will expire at varying dates through 2020. The utilization of these net operating loss carryforwards is limited to the future operations of the Company in the tax jurisdictions in which such carryforwards arose. The Company has U.S. federal tax credit carryforwards of $3.7 million which will expire at varying dates through 2031. The Company has state tax credit carryforwards of $1.7 million which will expire at varying dates through 2027. Cumulative undistributed earnings of certain foreign subsidiaries amounted to approximately $491 million as of December 31, 2011. The Company considers earnings from foreign subsidiaries to be indefinitely reinvested and, accordingly, no provision for U.S. federal and state income taxes has been made for these earnings. Upon distribution of foreign subsidiary earnings in the form of dividends or otherwise, such distributed earnings would be reportable for U.S. income tax purposes (subject to adjustment for foreign tax credits). Determination of the amount of any unrecognized deferred tax liability on these undistributed earnings is not practical. The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in China, Malaysia and Thailand. These tax incentives, including tax holidays, expire on various dates through 2015, and are subject to certain conditions with which the Company expects to comply. The net impact of these tax incentives was to lower income tax expense for the years ended December 31, 2011, 2010, and 2009 by approximately $10.5 million (approximately $0.18 per diluted share), $8.7 million (approximately $0.14 per diluted share) and $9.9 million (approximately $0.15 per diluted share), respectively. The Company must determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured to determine the amount of benefit to recognize in the financial statements. As of December 31, 2011, the total amount of the reserve for uncertain tax benefits including interest and penalties is $21.3 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:
|  | December 31, |
(in thousands) |  | 2011 |  |  | 2010 |  |  | 2009 |
Balance as of January 1 |  | $ | 14,759 |  |  | $ | 16,036 |  |  | $ | 23,121 |
Additions related to prior year tax positions |  |  | 7,056 |  |  |  | 120 |  |  |  | 135 |
Decreases related to prior year tax positions |  |  | (3,724 | ) |  |  | — |  |  |  | (2,800 | )
Decreases as a result of a lapse of the applicable statute |  |  |  |  |  |  |  |  |  |  |  |
of limitations in current year |  |  | — |  |  |  | (1,397 | ) |  |  | (4,420 | )
Balance as of December 31 |  | $ | 18,091 |  |  | $ | 14,759 |  |  | $ | 16,036 |
The increase in the total amount of unrecognized tax benefits reserve during 2011 is primarily the result of recording an income tax reserve against an income tax receivable that the Company had previously recorded for a subsidiary in Thailand offset by a decrease in the unrecognized tax benefits reserve for a settlement of income tax audits outside the United States. The decreases in the unrecognized tax benefits reserve during 2010 and 2009 are primarily the result of the expiration of the statute of limitations for worthless stock deductions and intercompany transactions. The reserve is classified as a current or long-term liability in the consolidated balance sheet based on the Company's expectation of when the items will be settled. The Company records interest expense and penalties accrued in relation to uncertain income tax benefits as a component of current income tax expense. The total amount of interest and penalties included in income tax expense during the year ended December 31, 2011, 2010 and 2009 was $(0.2) million, $(0.3) million and $0.07 million, respectively. The total amount of accrued potential interest and penalties on unrecognized tax benefits is $1.6 million and $1.6 million as of December 31, 2011. A subsidiary of the Company in Thailand has filed for a refund of $8.2 million of previously paid income taxes, which is included in other assets. The Thailand tax authorities are currently conducting an examination of the applicable filings. During 2011, the Company recorded a reserve for uncertain benefits of $7.1 million against this receivable. The Company and its subsidiaries in Brazil, China, Ireland, Luxembourg, Malaysia, Mexico, the Netherlands, Romania, Singapore, Thailand and the United States remain open to examination by the various local taxing authorities, in total or in part, for fiscal years 2006 to 2011. The Company is subject to examination by tax authorities for varying periods in various U.S. and foreign tax jurisdictions. During the course of such examinations disputes occur as to matters of fact and/or law. Also, in most tax jurisdictions the passage of time without examination will result in the expiration of applicable statutes of limitations thereby precluding the taxing authority from conducting an examination of the tax period(s) for which such statute of limitation has expired. The Company believes that it has adequately provided for its tax liabilities.

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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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