Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

INCOME TAXES

NOTE 14 — INCOME TAXES

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

	Years Ended December 31,
	2011			2010			2009
United States	$	(38,781	)	$	(37,710	)	$	25,650
Foreign		246,617			(54,955	)		(101,723	)
Total	$	207,836		$	(92,665	)	$	(76,073	)

The components of the consolidated income tax benefit (expense) from continuing operations were as follows:

	Years Ended December 31,
	2011			2010			2009
Current:
United States — Alternative minimum tax	$	2,015		$	(482	)	$	(2,249	)
United States — Foreign withholding tax		(842	)		(1,009	)		(1,509	)
Argentina		(1,219	)		(7,094	)		(6,284	)
Australia		(1,755	)		(251	)		592
Mexico		(1,084	)		(316	)		(124	)
Bolivia		(59,660	)		(20,268	)		(2,673	)
Canada		—			—			(53	)
Deferred:
Australia		(661	)		(541	)		200
Bolivia		(207	)		(1,388	)		(6,221	)
Mexico		(28,022	)		24,371			37,681
United States		(22,902	)		16,459			13,711
Income tax benefit (expense)	($	114,337	)	$	9,481		$	33,071

A reconciliation of the Company’s effective tax rate with the federal statutory tax rate for the periods indicated is as follows:

	Years Ended December 31
	2011			2010			2009
Tax benefit (expense) from continuing operations	$	(72,743	)	$	32,433		$	26,625
State tax provision from continuing operations		(10,600	)		4,726			2,282
Percentage depletion and related deductions		—			3,093			2,726
Change in valuation allowance		(6,032	)		2,734			20,303
Non-deductible imputed interest		(808	)		(1,718	)		(1,986	)
Uncertain tax positions		(1,279	)		(299	)		898
U.S. and foreign non-deductible expenses		(10,648	)		(9,052	)		(3,619	)
Foreign exchange rates		(4,440	)		(7,066	)		2,339
Foreign inflation and indexing		(3,829	)		(3,352	)		(2,635	)
Foreign tax rate differences		22,795			(9,861	)		(11,993	)
Foreign withholding taxes		(23,246	)		(2,986	)		(1,509	)
Other, net		(3,507	)		829			(360	)
	($	114,337	)	$	9,481		$	33,071

As of December 31, 2011 and 2010, the significant components of the Company’s deferred tax assets and liabilities were as follows:

	Years Ended December 31
	2011			2010
Deferred tax liabilities:
Mineral properties	$	453,818		$	450,902
Foreign subsidiaries — unremitted earnings		235,116			154,610
Property, plant and equipment, net		68,013			73,168
		756,947			678,680
Deferred tax assets:
Net operating loss carryforwards		128,073			165,362
Foreign subsidiaries — future tax credits		133,160			61,724
Royalty and other long-term debt		48,254			51,134
Capital loss carryforwards		35,562			42,830
Asset retirement obligation		9,638			9,003
Unrealized foreign currency loss and other		3,974			4,857
Accrued expenses		23,247			19,929
Tax credit carryforwards		11,987			11,127
Inventory		6,069			3,050
		399,964			369,016
Valuation allowance		(168,511	)		(164,036	)
		231,453			204,980
Net deferred tax liabilities	$	(525,494	)	$	(473,700	)

The Company has evaluated the amount of taxable income and periods over which it must be earned to allow for realization of the deferred tax assets. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this decision. Based upon this analysis, the Company has recorded valuation allowances as follows:

	Years Ended December 31
	2011		2010
U.S.	$	123,539	$	121,159
Argentina		10,739		7,591
Canada		5,390		6,720
New Zealand		27,026		26,871
Other		1,817		1,695
	$	168,511	$	164,036

The Company continues to monitor the valuation allowance quarterly, and will make the appropriate adjustments as necessary should circumstances change.

U.S. GAAP provides the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a Company’s financial statements. U.S. GAAP prescribes a recognition threshold of more likely than not for all tax positions taken or expected to be taken on a return.

A reconciliation of the beginning and ending amount related to unrecognized tax benefits is as follows:

Unrecognized tax benefits at January 1, 2010	$	748
Gross increase to current period tax positions		328
Gross decrease to prior period tax positions		—
Unrecognized tax benefits at December 31, 2010	$	1,076
Gross increase to current period tax positions		1,279
Gross decrease to prior period tax positions		—
Unrecognized tax benefits at December 31, 2011	$	2,355

The Company has decided to classify interest and penalties associated with these uncertain tax positions as a component of income tax expense and has recognized additional interest and penalties of $0.4 million, $0.04 million and $0.03 million during 2011, 2010, and 2009, respectively.

The Company files income tax returns in various U.S. federal and state jurisdictions, in all identified foreign jurisdictions and various others. To the extent there are loss carryovers in any such jurisdictions, the statute of limitations generally remains open.

The Company has previously determined the earnings from certain foreign jurisdictions were not indefinitely reinvested. Accordingly, the Company has recognized deferred taxes and withholding taxes related to those jurisdictions. In 2011, the Company retained its position established in 2008 when it was determined that it was reasonable, appropriate and prudent that a portion of the anticipated future cash flows from Mexico would be indefinitely reinvested to fund ongoing capital improvements and additional exploration activities within and around the Palmarejo operating site. Accordingly, U.S. and non-U.S. income and withholding taxes for which deferred taxes might otherwise be required, have not been provided on a cumulative amount of temporary differences (including, for this purpose, any difference between the tax basis in the stock of a consolidated subsidiary and the amount of the subsidiary’s net equity determined for financial reporting purposes) related to investments in foreign subsidiaries of approximately $170 million for the years ended December 31, 2011 and 2010. The additional U.S. and non-U.S. income and withholding tax that would arise on the reversal of the temporary differences could be offset in part by tax credits. Because the determination of the amount of available tax credits and the limitations imposed on the annual utilization of such credits are subject to a highly complex series of calculations and expense allocations, it is impractical to estimate the amount of net income and withholding tax that might be payable if a reversal of temporary differences occurred.

During 2007, the Company incurred an ownership change which generally limits the availability of existing tax attributes, including net operating loss carryforwards to reduce future taxable income. The Company has the following tax attribute carryforwards as of December 31, 2011, by jurisdiction:

	U.S.		Australia		Bolivia		Canada		Chile		Mexico		New Zealand		Other		Total
Regular net operating losses		122,388		—		—		4,798		—		172,532		96,524		6,056		402,298
Alternative minimum tax net operating losses		15,285		—		—		—		—		—		—		—		15,285
Capital losses		90,258		—		—		—		—		—		—		—		90,258
Alternative minimum tax credits		3,645		—		—		—		—		—		—		—		3,645
Foreign tax credits		12,659		—		—		—		—		—		—		—		12,659

The U.S. net operating losses expire from 2017 through 2031 and the Canada net operating losses expire from 2028 through 2029. The Mexico net operating losses expire from 2017 to 2019, while the remaining net operating losses from the foreign jurisdictions have an indefinite carryforward period. The U.S. capital losses expire in 2015 while the Canada capital losses generally have an indefinite carryforward period. Alternative minimum tax credits do not expire and foreign tax credits expire if unused by 2019.