INCOME TAXES |
9 Months Ended |
|---|---|
Sep. 30, 2011 | |
| INCOME TAXES [Abstract] | |
| INCOME TAXES |
NOTE 8-INCOME TAXES
The Company calculates interim effective tax rates in accordance with the FASB guidance for income taxes and applies the estimated annual effective tax rate to year-to-date pretax income (loss) at the end of each interim period to compute a year-to-date tax expense (or benefit). This guidance requires departure from effective tax rate computations when losses incurred within tax jurisdictions cannot be carried back and future profits associated with operations in those tax jurisdictions cannot be assured beyond any reasonable doubt. Accordingly, the Company has calculated and applied an expected annual effective tax rate of approximately 19% (as compared to 16% in the prior year), excluding significant, unusual or extraordinary items, for ordinary income associated with operations, which are principally outside of the United States, for which the Company currently expects to have annual taxable income. The Company has not recorded tax benefits associated with losses from operations for which future taxable income cannot be reasonably assured. As required by this guidance, the Company also includes tax effects of significant, unusual or extraordinary items in income tax expense in the interim period in which they occur.
Net income tax benefit from continuing operations is $29.5 million for the nine months ended September 30, 2011. The components of tax expense that contributed to the net income tax benefit for the nine months ended September 30, 2011 primarily consisted of income tax expense of $16.7 million based on the expected annual rate pertaining to income for the nine month period ending on September 30, 2011, state and local taxes of $4.1 million, withholding taxes of $3.5 million, federal tax benefits of $14.9 million attributable to the carryback of net operating losses and a discrete tax benefit of $39.5 million for the reversal of valuation allowances recorded against United States federal and state deferred tax assets driven by deferred tax attributes relating to the acquisition of the remaining interest sin Front Line. See Note 3-Acquisitions for further discussion regarding the 2011 acquisition of the remaining equity interests in Front Line.
As of September 30, 2011 and December 31, 2010, the Company had unrecognized tax benefits of approximately $11.4 million and $10.9 million, respectively. During the nine months ended September 30, 2011, unrecognized tax benefits increased by approximately $0.5 million for interest and penalty accruals. All of these unrecognized tax benefits would favorably impact the effective tax rate if recognized in the future.
Historically, the Company has reinvested all foreign earnings in its continuing foreign operations. The Company currently believes all undistributed foreign earnings will be indefinitely reinvested in its foreign operations.
The tax years 2001 through 2010 remain open to examination by the major tax jurisdictions to which the Company is subject.
|