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Income Taxes
9 Months Ended
Sep. 30, 2011
Income Taxes [Abstract] 
Income Taxes

Note 8 – Income Taxes

Our effective tax rate on continuing operations for the nine months ended September 30, 2011 is equal to our expected annual tax rate of 21%. This rate is lower than the U.S. statutory rate of 35%, primarily due to two factors:

 

  1.) income in foreign jurisdictions taxed at lower statutory rates ranging from 8% to 34%, and

 

  2.) income in the U.S. is taxed at an effective rate of 2%, due to the utilization of net operating loss (NOL) carryforwards, where the tax benefit for these losses is fully reserved.

In the second quarter of 2011, our effective annual tax rate was estimated to be 30%. This was lower than the U.S. statutory tax rate of 35%, primarily due to income in foreign jurisdictions taxed at lower rates, partially offset by expected losses in the U.S., where the tax benefit for these losses was fully reserved. The effective tax rate of 18% for the third quarter of 2011 reflects the decrease in the expected annual rate.

Our expected annual tax rate for the nine months ended September 30, 2010 was 32%. This was lower than the U.S. statutory tax rate of 35%, primarily due to income in foreign jurisdictions taxed at lower rates, partially offset by losses in the U.S., where the tax benefit for these losses was fully reserved. The effective tax rate for the nine months ended September 30, 2010 was 27%. This was lower than the expected annual tax rate of 32%, due to the benefit of discrete items of $282 related to the true-up of our provisions for prior year tax returns as filed and other tax adjustments. In the second quarter of 2010, our effective annual tax rate was estimated to be 35%. The effective tax rate of 28% for the third quarter of 2010 reflects the reduction in the estimated annual tax rate.

At December 31, 2010, we had U.S. net operating loss (NOL) carryforwards of $21,247. Of this amount, $14,727 would result in a benefit to earnings. The remainder represents tax deductions for employee stock option gains, the benefit for which would be credited to paid-in capital. The U.S. loss carryforwards expire in varying amounts beginning in 2020 and continuing through 2029. In addition, if certain substantial changes in the company's ownership were deemed to have occurred, there would be an annual limitation on the amount of the U.S. carryforwards that could be utilized. At December 31, 2010, we also had foreign NOL carryforwards of $4,834. The foreign NOL carryforwards have no expiration dates. A valuation reserve has been provided for the U.S. and certain foreign operating loss carryforwards to offset the future benefits because we have not determined that their realization is more likely than not.