Netgear 2011 Annual Report Download - page 89

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Table of Contents
The effective tax rate differs from the applicable U.S. statutory federal income tax rate as follows:
Income tax benefits in the amount of $3.5 million, $3.6 million and $136,000 related to stock options were credited to additional paid-in
capital during the years ended December 31, 2011, 2010 and 2009, respectively. As a result of changes in fair value of available for sale
securities, income tax expense of $8,000, $3,000 and $40,000 was recorded in comprehensive income related to the year ended December 31,
2011, December 31, 2010, and December 31, 2009, respectively.
As of December 31, 2011, the Company has $574,000 and $1.4 million of acquired federal and state net operating loss carry forwards as
well as $310,000 of California tax credits carryforwards. All of these losses and $111,000 of these credits are subject to annual usage limitations
under Internal Revenue Code Section 382. The federal losses expire in different years beginning in fiscal 2021. The state loss begins to expire in
fiscal 2015. The state tax credit carryforward has no expiration
The Company files income tax returns in the U.S. federal jurisdiction, various state and local, and foreign jurisdictions. With few
exceptions, the Company is no longer subject to U.S. federal, state and local, or foreign income tax examinations for years before 2007. In 2011,
the IRS commenced an examination of the Company’s 2008 and 2009 tax years. The Company has limited audit activity in various states and
foreign jurisdictions. Due to the uncertain nature of ongoing tax audits, the Company has recorded its liability for uncertain tax positions as part
of its long-term liability as payments cannot be anticipated over the next 12 months. The existing tax positions of the Company continue to
generate an increase in the liability for uncertain tax positions. The liability for uncertain tax positions may be reduced for liabilities that are
settled with taxing authorities or on which the statute of limitations could expire without assessment from tax authorities. The possible reduction
in liabilities for uncertain tax positions resulting from the expiration of statutes of limitation in multiple jurisdictions in the next 12 months is
approximately $1.0 million, excluding the interest, penalties and the effect of any related deferred tax assets or liabilities.
85
Year Ended December 31,
2011
2010
2009
Tax at federal statutory rate
35.0
%
35.0
%
35.0
%
State, net of federal benefit
1.5
4.2
3.1
Impact of international operations
(9.5
)
5.1
28.4
Stock
-
based compensation
0.0
0.7
4.0
Tax credits
(0.7
)
(0.7
)
(1.7
)
Others
0.1
(0.1
)
2.5
Provision for income taxes
26.4
%
44.2
%
71.3
%