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Income Taxes
9 Months Ended
Sep. 30, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

Income taxes for the interim periods presented have been included in the accompanying Consolidated Financial Statements on the basis of an estimated annual effective tax rate ("ETR"). The determination of the consolidated provision for income taxes requires management to make certain judgments and estimates. Changes in the estimated level of annual pre-tax earnings, tax laws and changes resulting from tax audits can affect the overall effective income tax rate, which impacts the level of income tax expense and net income. Judgments and estimates related to the Company’s projections and assumptions are inherently uncertain; therefore, actual results could differ materially from projections. The ETR deviates from the statutory U.S. federal income tax rate, mainly due to the taxing jurisdictions in which the Company and its foreign subsidiaries generate taxable income or loss, the favorable impact of its significant tax holidays in Malaysia and judgments as to the realizability of the Company’s deferred tax assets.
The Company's ETR for the three and nine months ended September 30, 2015 was an 18.6% benefit and a 0.9% provision, respectively. During the three and nine months ended September 30, 2015, the Company recorded a $3.0 million discrete tax benefit and $1.1 million discrete tax benefit, respectively, for U.S. operations inclusive of the impact of assessing the recoverability of the deferred tax assets in the United States.  As of September 30, 2015, the Company does not expect to benefit any future losses or deferred tax assets generated in the United States.

The Company's ETR for the three and nine months ended September 30, 2014 was a 9.3% benefit and a 65.8% provision, respectively. During the three and nine months ended September 30, 2014, the ETR was impacted by discrete items totaling $1.8 million and $37.5 million, respectively. During the three months ended September 30, 2014, the Company recorded tax expense of $1.7 million related to Chinese withholding taxes paid on 2013 royalty income. During the nine months ended September 30, 2014, the Company also recorded a valuation allowance of $36.8 million on certain foreign subsidiaries' net deferred tax assets, primarily net operating losses, as the Company believes it is more likely than not that these assets will not be realized, which was partially offset by a benefit related to an additional Malaysia tax holiday of $4.4 million.

Absent the discrete items, the ETR for the three and nine months ended September 30, 2015 was a 2.2% benefit and a 3.5% provision, respectively. Absent the discrete items, the ETR for the three and nine months ended September 30, 2014 was a 20.5% benefit and a 6.6% benefit, respectively. The change in the ETR, excluding the discrete items, was due to the mix of earnings by taxing jurisdictions.
 
The ETR is impacted by two tax holidays granted to the Company in Malaysia effective through December 31, 2021. These tax holidays are subject to the Company's satisfaction of certain conditions, including investment or sales thresholds, which the Company expects to satisfy. If the Company fails to satisfy such conditions, the Company's ETR may be significantly adversely impacted. The impact of these incentives for the three and nine months ended September 30, 2015 was approximately a $6.0 million benefit and a $7.9 million benefit, respectively. The impact of the tax holidays on a per share basis for the three and nine months ended September 30, 2015 was a $0.07 benefit per share and a $0.09 benefit per share, respectively.

The Company recognizes tax benefits from uncertain tax positions only if it believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.  The Company evaluates those tax positions quarterly and adjustments are made to reserves when facts and circumstances change. During the nine months ended September 30, 2015, the Company recorded a $0.6 million benefit from the release of a reserve in the second quarter of 2015 related to an uncertain tax position due to the expiration of the statute of limitations.