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Income Taxes
9 Months Ended
Sep. 30, 2012
Income Taxes  
Income Taxes

15. Income Taxes

 

The income tax expense was $25.9 million and $50.5 million for the three months ended September 30, 2012 and 2011, respectively, and was $64.7 million and $48.5 million for the nine months ended September 30, 2012 and 2011, respectively. The income tax provision consists of U.S. and Ghanaian income and Texas margin taxes.

 

The components of income (loss) before income taxes were as follows:

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

(In thousands)

 

Bermuda

 

$

(2,316

)

$

5,945

 

$

(8,735

)

$

(2,901

)

United States

 

3,145

 

3,430

 

9,492

 

4,239

 

Foreign—other

 

(11,156

)

92,882

 

(34,661

)

35,201

 

Income (loss) before income taxes

 

$

(10,327

)

$

102,257

 

$

(33,904

)

$

36,539

 

 

Our effective tax rate for the three months ended September 30, 2012 and 2011 was (251)% and 49%, respectively. For the nine months ended September 30, 2012 and 2011 our effective tax rate was (191)% and 133%. The effective tax rate for the United States is approximately 43% and 35% for the three months ended September 30, 2012 and 2011, respectively, and 116% and 36% for the nine months ended September 30, 2012 and 2011, respectively. The increase in the effective tax rate in the United States resulted from the difference between the amount deductible on our tax return for vested stock awards and the amount of cumulative compensation cost recognized for accounting purposes. The effective tax rate for Ghana ranges from 32% to 39% for all periods presented. The effective tax rate for our other foreign jurisdictions is 0%. Our other foreign jurisdictions have a 0% effective tax rate because they reside in countries with a 0% statutory rate, or we have experienced losses in those countries and have a full valuation allowance reserved against the corresponding net deferred tax assets.

 

The Company has no material unrecognized income tax benefits.

 

A subsidiary of the Company files a U.S. federal income tax return and a Texas margin tax return. In addition to the United States, the Company files income tax returns in the countries in which we operate. The Company is open to U.S. federal income tax examinations for tax years 2009 through 2011 and to Texas margin tax examinations for the tax years 2007 through 2011. In addition, the Company is open to income tax examinations for tax years as early as 2004 in its significant foreign jurisdictions (Ghana, Cameroon and Morocco).

 

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense if they are considered probable, but has had no need to accrue any to date.