Memorex 2012 Annual Report Download - page 82

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The income tax provision from continuing operations differs from the amount computed by applying the statutory United
States income tax rate (35 percent) because of the following items:
Years Ended December 31,
2012 2011 2010
(In millions)
Tax at statutory U.S. tax rate ....................................... $(119.4) $(15.0) $ (26.8)
State income taxes, net of federal benefit ............................ (6.8) (2.2) (3.7)
Net effect of international operations ............................... 23.6 (1.3) (2.8)
Valuation allowances ........................................... 95.9 17.6 105.2
U.S. tax on foreign earnings ...................................... 3.9 4.8 5.1
Uncertain tax positions .......................................... 0.3 0.2 1.3
Other ....................................................... 2.1 (0.3) 3.6
Income tax provision (benefit) ....................................... $ (0.4) $ 3.8 $ 81.9
In comparing our 2012 tax benefit of $0.4 million to our 2011 tax provision of $3.8 million, the primary change is due to
lower withholding tax expense incurred during 2012, settlements with taxing authorities concluded during 2012, the impact of
activity in other comprehensive income and the mix of taxable income (loss) by country.
In comparing our 2011 tax provision of $3.8 million to our 2010 tax provision of $81.9 million, the primary change is due
to the U.S. not receiving a tax benefit from the 2011 net operating loss and the establishment of a valuation allowance in 2010
on our U.S. deferred tax assets. Other items that had an impact on the 2011 tax provision included a $5.0 million benefit for
the reversal of a foreign net operating loss valuation allowance and changes in the mix of income (loss) by jurisdiction.
In 2012, 2011 and 2010 the net cash received (or paid) for income taxes, relating to both continuing and discontinued
operations, was ($4.4) million, ($4.9) million and $6.4 million, respectively.
Tax laws require certain items to be included in our tax returns at different times than the items are reflected in our
results of operations. Some of these items are temporary differences that will reverse over time. We record the tax effect of
temporary differences as deferred tax assets and deferred tax liabilities in our Consolidated Balance Sheets.
The components of net deferred tax assets and liabilities were as follows:
As of December 31,
2012 2011
(In millions)
Accounts receivable allowances ............................................ $ 6.9 $ 5.6
Inventories ............................................................ 12.9 12.3
Compensation and employee benefits ........................................ 11.2 9.7
Tax credit carryforwards .................................................. 39.2 35.0
Net operating loss carryforwards ............................................ 83.5 49.5
Accrued liabilities and other reserves ........................................ 9.3 16.3
Pension .............................................................. 9.4 8.7
Property, plant and equipment ............................................. — 14.0
Intangible assets ........................................................ 76.9 5.6
Other, net ............................................................. 2.7 5.5
Gross deferred tax assets ................................................. 252.0 162.2
Valuation allowance ..................................................... (239.1) (141.1)
Deferred tax assets ...................................................... 12.9 21.1
Property, plant and equipment ............................................. (1.3) —
Deferred tax liabilities .................................................... (1.3) —
Net deferred tax assets ................................................... $ 11.6 $ 21.1
79