Income Tax Expense

12 Months Ended

Dec. 31, 2011

Income Tax Expense

Income Tax Expense

(14) Income Tax Expense

        The components of income (loss) before income taxes are as follows:

	Years Ended December 31,
	2011			2010			2009
United States ("U.S.")	$	(86,085	)	$	(84,751	)	$	(100,050	)
Foreign		89,498			79,438			73,718
Income (loss) before income tax expense	$	3,413		$	(5,313	)	$	(26,332	)

        The components of the provision for income taxes are as follows:

	Years Ended December 31,
	2011			2010		2009
Current
U.S. Federal	$	440		$	7,565	$	(16,229	)
U.S. State		215			25		426
Foreign		13,504			6,210		1,321
Total		14,159			13,800		(14,482	)
Deferred
U.S. Federal		2,000			100,982		26,736
U.S. State		87			16,882		(7,604	)
Foreign		(263	)		12,224		8,897
Total		1,824			130,088		28,029
Total income tax expense	$	15,983		$	143,888	$	13,547

        The reconciliation of the U.S. federal statutory tax rate to the actual tax rate is as follows:

	Years Ended December 31,
	2011			2010			2009
Statutory U.S. federal income tax rate		35.0	%		35.0	%		35.0	%
U.S. state income taxes, net of federal benefit		(132.2)	%		141.9	%		40.3	%
Federal benefit of R&D credits, net		(2.5)	%		9.5	%		(14.9)	%
Foreign earnings at lower rates than U.S. federal rate		(530.2)	%		170.9	%		56.0	%
Federal expense (benefit) of U.S. permanent differences		246.9	%		(251.9)	%		(2.7)	%
Federal valuation allowance adjustments		853.3	%		(2816.1)	%		(165.8)	%
Other		(1.6)	%		1.8	%		0.7	%
Effective income tax rate		468.7	%		(2708.9)	%		(51.4)	%

        The effective tax rate in 2011 is 468.7% compared to (2,708.9)% in 2010. During the year ended December 31, 2010, we recorded a valuation allowance of $149.6 million against U.S. deferred tax assets. The income tax expense in 2011 is primarily attributable to income tax expense in our international jurisdictions. The effective tax rate for 2011 does not include the benefit of the current year U.S. tax loss as a result of the valuation allowance against our U.S. deferred tax assets.

        Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and the amounts used for income tax purposes. The deferred income tax balances are established using the enacted statutory tax rates and are adjusted for changes in such rates in the period of change.

	December 31,
	2011			2010
Deferred tax assets:
Inventory valuation	$	10,294		$	8,886
Reserves and other accrued expenses		6,865			5,096
Compensation not currently deductible		9,168			6,184
Employee pension benefit included in other comprehensive (loss) income		3,097			1,711
Unrealized losses and income from derivative financial instruments included in other comprehensive (loss) income		—			758
Share based compensation		26,326			25,085
Net operating loss carry forwards		136,018			125,483
Tax credit carry forwards		41,881			45,790
Differences in financial reporting and tax basis for Property and Equipment		13,148			17,729
Valuation allowance		(236,296	)		(234,813	)
Realizable deferred tax assets		10,501			1,909
Deferred tax liabilities:
Deferred costs and prepaid expenses		(2,795	)		(923	)
Unrealized losses and income from derivative financial instruments included in other comprehensive (loss) income		(44	)		—
Differences in financial reporting and tax basis for:
Identifiable intangible assets		(51,628	)		(43,837	)
Total deferred tax liabilities		(54,467	)		(44,760	)
Net deferred tax assets on balance sheet		(43,966	)		(42,851	)
Reported As:
Current deferred tax assets		4,697			2,448
Non-current deferred tax assets		11,217			15,580
Current deferred tax liabilities		(3,616	)		(21	)
Non-current deferred tax liabilities		(56,264	)		(60,858	)
Net deferred tax assets on the balance sheet	$	(43,966	)	$	(42,851	)

        In accordance with Accounting Standards Codification ("ASC") 740, Income Taxes, the current and non-current components of our deferred tax balances are generally based on the balance sheet classification of the asset or liability creating the temporary difference. If the deferred tax asset or liability is not related to a component of our balance sheet, such as our net operating loss carry forwards, the classification is presented based on the expected reversal date of the temporary difference. Our valuation allowance has been classified as current or non-current based on the percentage of current and non-current deferred tax assets to total deferred tax assets.

        At December 31, 2011, we had net operating loss ("NOL") carry forwards (tax-effected) for federal, state and foreign income tax purposes of $78,230, $20,413 and $37,375, respectively. If not utilized, the federal and state tax loss carry forward will expire through 2031. Certain of our federal NOL carry forwards are limited due to prior-year changes in ownership. The foreign NOL carry forwards can be carried forward for periods that vary from ten years to indefinitely.

        We have foreign tax credit carry forwards of approximately $30,067 which if unutilized will expire through 2018, research and development tax credit carry forwards of $9,003 which if unutilized will expire through 2031, alternative minimum tax credit carry forwards of $367 which can be carried forward indefinitely, state tax credits of $1,901 which if unutilized will expire through 2021, and other non-U.S. tax credits of $543 which can be carried forward indefinitely.

        At December 31, 2011 and December 31, 2010, we established a valuation allowance of $236,296 and $234,813 against the U.S. and foreign deferred tax assets that, in the judgment of management, are more likely than not to expire before they can be utilized. In assessing the recoverability of our deferred tax assets, we analyzed all evidence, both positive and negative. We considered, among other things, our deferred tax liabilities, our historical earnings and losses, projections of future income, and tax-planning strategies available to us in the relevant jurisdiction.

        We established at December 31, 2011 and December 31, 2010 valuation allowances of $146,681 and $122,317, respectively, against the benefit of U.S. federal deferred tax assets and valuation allowances of $29,170 and $24,432, respectively, against the benefit of state deferred tax assets.

        At December 31, 2011 and 2010, we established valuation allowances of $30,067 and $33,689, respectively, against the benefit of the deferred tax assets related to the U.S. foreign tax credit carry forwards. The decrease in the foreign tax credit valuation allowance in 2011 is due to the election by the Company to deduct foreign tax credits recorded in 2010 on its 2011 U.S. federal income tax return.

        At December 31, 2011 and 2010, we established valuation allowances of $30,378 and $54,375, respectively, against the benefit of the deferred tax assets related to foreign NOL carry forwards to measure them at their expected realizable value. The decrease in the foreign net operating loss valuation allowance is due to either the expiration or reversal of certain foreign net operating losses.

        The net increase in all of the Company's U.S. and foreign valuation allowances for 2011 and 2010 was $1,483 and $139,662, respectively.

        Deferred taxes have not been provided on the excess of book basis over tax basis in the shares of certain foreign subsidiaries because these basis differences are not expected to reverse in the foreseeable future and are essentially permanent in duration. Our intention is to continue to reinvest the earnings of our foreign subsidiaries indefinitely. The estimated cumulative amount of earnings from foreign subsidiaries that are permanently reinvested outside of the U.S. is $290,032 as of December 31, 2011.

Unrecognized Tax Benefits

        The Company applies a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes the impact of a tax position in the financial statements when the position is more likely than not of being sustained on audit based on the technical merits of the position.

        The total amount of unrecognized tax benefits as of December 31, 2011 was approximately $1,876. Of this amount, approximately $1,303, if recognized, would be included in our statement of operations and have an impact on our effective tax rate. The Company does not anticipate a material reduction of its liability for unrecognized tax benefits before December 31, 2012.

        We recognize interest accrued for unrecognized tax benefits in interest expense and recognize penalties in income tax expense. During the years ended December 31, 2011, 2010 and 2009, we recognized approximately $67, $102 and $(1,206), respectively, in interest and penalties. We had approximately $440 and $484 for the payment of interest and penalties accrued at December 31, 2011 and 2010, respectively.

        We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2008.

        The Company had the following activity for unrecognized tax benefits:

	Year Ended December 31,
	2011			2010			2009
Balance at beginning of period	$	1,760		$	6,612		$	18,250
Tax positions related to current year additions		162			—			—
Additions for tax positions of prior years		165			211			—
Tax positions related to prior years reductions		—			—			(1,114	)
Reductions due to lapse of statute of limitations on tax positions		—			(5,020	)		(33	)
Settlements		(211	)		(43	)		(10,491	)
Balance at end of period	$	1,876		$	1,760		$	6,612