|
14. INCOME TAXES
Our effective income tax rates for the three and nine months ended September 30, 2011 were 9.3% and 18.1%, respectively, as compared to 30.7% and 0.4%, as reported for the three and nine months ended September 30, 2010, respectively. The difference in the rate as compared to the U.S. statutory federal income tax rate in 2011 and 2010 was primarily due to the release of the valuation allowance that results from utilization of Canadian net operating losses and the resolution of uncertain tax positions.
Liability for Unrecognized Income Tax Benefits
As of September 30, 2011, our liability for unrecognized income tax benefits was approximately $39.4 million. Of this amount, approximately $20.8 million relates to accrued interest and penalties. If not realized, all of this amount would affect our effective tax rate. For the three months and nine months ended September 30, 2011, we recognized approximately $0.4 million and $1.2 million, respectively of additional interest expense in our income tax provision related to our liability for unrecognized income tax benefits. Our liability for unrecognized income tax benefits decreased during the three months and nine months ended September 30, 2011, primarily as the result of the resolution of uncertain tax positions acquired with Royal Group, primarily in Canada, and foreign currency translation adjustments, offset by the accrual of additional interest expense related to our liabilities for unrecognized tax benefits.
A reconciliation of the liability for unrecognized tax benefits for the three month and nine month periods ended September 30, 2011 is set forth in the table below:
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Three months
ended
September 30,
2011 |
|
Nine months
ended
September 30,
2011 |
|
|
Balance as of beginning of the period |
|
$ |
52,975 |
|
$ |
53,315 |
|
| |
Additions for current year tax positions |
|
|
14 |
|
|
14 |
|
| |
Additions for prior year tax positions |
|
|
351 |
|
|
1,208 |
|
| |
Reductions for prior year tax positions |
|
|
(7,877 |
) |
|
(7,898 |
) |
| |
Settlements |
|
|
(2,952 |
) |
|
(2,952 |
) |
| |
Reductions related to expirations of statute of limitations |
|
|
(24 |
) |
|
(2,534 |
) |
| |
Foreign currency translation |
|
|
(3,067 |
) |
|
(1,733 |
) |
| |
|
|
|
|
|
|
Balance as of the end of the period |
|
$ |
39,420 |
|
$ |
39,420 |
|
| |
|
|
|
|
|
|