Adaptec 2011 Annual Report Download - page 77

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Table of Contents
The (recovery of) provision for income taxes consists of the following components:
Year Ended
(in thousands)
December 31,
2011
December 26,
2010
December 27,
2009
Current:
Domestic $ (3,907) $ 19,256 $ 640
Foreign 13,390 28,616 1,750
9,483 47,872 2,390
Deferred:
Domestic 4,114 5,822 3,791
Foreign (17,413) (23,532) (1,957)
(13,299) (17,710) 1,834
(Recovery of) provision for income taxes $ (3,816) $ 30,162 $ 4,224
Reconciliation between the Company's effective tax rate and the U.S. Federal statutory rate is as follows:
(in thousands)
December 31,
2011
December 26,
2010
December 27,
2009
Income before provision for income taxes $ 80,883 $ 113,324 $ 51,101
Federal statutory tax rate 35% 35% 35%
Income taxes at U.S. Federal statutory rate 28,309 39,663 17,885
Tax effect on intercompany transactions 22,025 14,846 78,431
Change in liability for unrecognized tax benefits 6,119 10,184 14,093
Non-deductible intangible asset amortization 3,819 8,205 10,982
Non-deductible stock-based compensation 5,234 3,969 4,396
Non-deductible items and other (6,521) (394) (1,596)
Utilization of stock option related loss carry-forwards recorded in equity 3,223 13,407 —
Adjustment of prior years' taxes and tax credits (27,236) (5,095) 340
Investment tax credits, net (18,455) (14,416) (9,934)
Foreign and other rate differential (25,301) (31,114) (15,654)
Change in valuation allowance 4,968 (9,093) (94,719)
(Recovery of) provision for income taxes $ (3,816) $ 30,162 $ 4,224
On a world-wide consolidated basis, the Company recorded a recovery of income taxes of $3.8 million, a provision for income taxes of $30.2 million
and a provision for income taxes of $4.2 million for 2011, 2010, and 2009, respectively. The effective tax rate was negative 5% for 2011 and positive 27%
and 8% for 2010 and 2009, respectively.
The difference between our effective tax rates and the 35% US federal statutory rate in each of 2011, 2010, and 2009, resulted primarily from foreign
earnings eligible for tax rates lower than the federal statutory rate due to economic incentives subject to certain criteria granted by foreign jurisdictions and
extending to approximately 2020, adjustments for prior years taxes and tax credits, the effect of intercompany transactions, investment tax credits earned,
changes in valuation allowance, changes in accruals related to the unrecognized tax benefit liabilities, permanent differences arising from stock-based
compensation, non-deductible, intangible asset amortization and utilization of stock option related loss carryforwards recorded in equity.
The 2011 recovery of income taxes of $3.8 million consisted of a recovery for $11.3 million related to adjustments to prior period estimates and a
foreign subsidiary's tax audit settlement, $11.8 million decrease in tax expense from operations, net of investment tax credits , $3.2 million tax expense from
stock option related
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