Income Taxes

Income (loss) from continuing operations before income tax (expense) benefit consists of the following for the three and six months ended June 30:



	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
United States	$	(2,249	)	$	(3,530	)	$	(3,316	)	$	(5,414	)
Outside the United States	(26,052		)	29,661			(7,921		)	68,573
Income (loss) from continuing operations before income tax (expense) benefit	$	(28,301	)	$	26,131		$	(11,237	)	$	63,159

Effective income tax rate	19.6		%	1.3		%	4.1		%	9.6		%

Our effective income tax rates are impacted by the charges related to the VAC inventory purchase accounting step-up and LCM charges ($53.9 million and $69.6 million for the three and six months ended June 30, 2012, respectively). Excluding the impact of these charges, the effective income tax rate for the three and six months ended June 30, 2012 would have been 27.8% and 29.2%, respectively.

Our effective income tax rates for the three and six months ended June 30, 2012 are lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Germany, Finland, Malaysia and Taiwan), a tax efficient financing structure and the effect of foreign currency translation, partially offset by losses in certain jurisdictions (including the U.S.) with no corresponding tax benefit. In the three and six months ended June 30, 2012, there is no U.S. tax expense related to the planned repatriation of foreign earnings due to utilization of foreign tax credits and U.S. losses.

Our effective income tax rates for the three and six months ended June 30, 2011 are lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Finland, Malaysia and Taiwan), a tax efficient financing structure and the effect of foreign currency translation, partially offset by losses in certain jurisdictions (including the U.S.) with no corresponding tax benefit. Our effective income tax rate for the three and six months ended June 30, 2011 was also favorably impacted by a “tax holiday” from income taxes in Malaysia that expired December 31, 2011. This arrangement reduced income tax expense by $0.7 million and $1.9 million and increased net income per diluted share by approximately $0.02 and $0.06 in the three and six months ended June 30, 2011. In the three and six months ended June 30, 2011, there is no U.S. tax expense related to the planned repatriation of foreign earnings due to utilization of foreign tax credits and U.S. losses.

As of June 30, 2012, we had a receivable of $37.6 million (included in Refundable and prepaid income taxes on the Consolidated Balance Sheets) related to amending our U.S. tax returns. The Company expects to receive this refund in 2012.