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INCOME TAXES
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6 Months Ended |
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Jun. 30, 2011
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| INCOME TAXES |
7. INCOME TAXES
We
are subject to U.S. federal, state and international income taxes.
We are generally no longer subject to federal, state, or
international income tax examinations by tax authorities for years
ending prior to December 31, 2002, with few exceptions. Due to the
potential for resolution of state and foreign examinations, and the
expiration of various statutes of limitations, it is reasonably
possible that our gross unrecognized tax benefit balance may change
within the next twelve months by a range of $0 to $5.0
million.
Effective Tax Rate. Our
effective income tax rate was 59.4% for the three months ended June
30, 2011, up from 35.3% for the same period in 2010 due primarily
to the impact of recording $17.5 million of tax expense associated
with the Brazilian Transaction. The impact of the Brazilian
Transaction increased our effective rate 23.2% for the
quarter. The effective income tax rate on the Brazilian
Transaction is higher than the statutory rate primarily due to the
recognition of tax impacts related to foreign currency changes for
which we had not previously recorded tax expense because we have
historically been permanently invested in Brazil with respect to
foreign currency fluctuations. The remainder of the rate
increase is due to a higher foreign income tax rate and the effect
of changes in various state income tax laws. The effective
income tax rate was 48.4% for the six months ended June 30, 2011,
up from 36.4% for the same period in 2010 with the increase
primarily due to the Brazilian Transaction. The impact of the
Brazilian Transaction increased our effective rate 11.4% for the
six months ended June 30, 2011. The six month effective
income tax rate also increased due to a higher foreign tax rate and
the effect of changes in various state income tax
laws.
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