Note J – Income Taxes

The Company’s effective income tax rate generally exceeds the statutory U.S. tax rate of 35%. The effective tax rate is calculated as the amount of income tax expense divided by income before income tax expense. For the three-month and nine-month periods in 2014 and 2013, the Company’s effective income tax rates were as follows:



	2014		2013
Three months ended September 30	31.6	%	42.8	%
Nine months ended September 30	43.7	%	44.6	%

The effective tax rates for most periods presented exceeded the U.S. statutory tax rate of 35% due to several factors, including: the effects of income generated in foreign tax jurisdictions, certain of which have income tax rates that are higher than the U.S. Federal rate; U.S. state tax expense; and certain expenses, including exploration and other expenses in certain foreign jurisdictions, for which no income tax benefits are available or are not presently being recorded due to a lack of reasonable certainty of adequate future revenue against which to utilize these expenses as deductions. The effective tax rate for the three-month period ended September 30, 2014 was below the U.S. statutory tax rate due to a $34.3 million U.S. tax benefit associated with costs in Kurdistan recognized upon wind-up of operations in that country. Excluding the benefit for Kurdistan, the effective tax rate for the three-month period ended September 30, 2014 was 40.3%.

The Company’s tax returns in multiple jurisdictions are subject to audit by taxing authorities. These audits often take years to complete and settle. Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future years from resolution of outstanding unsettled matters. As of September 30, 2014, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows: United States – 2010; Canada – 2008; United Kingdom – 2012; and

Malaysia – 2007.