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Income Taxes
3 Months Ended
Jun. 30, 2011
Income Taxes [Abstract]  
Income Taxes
(5) Income Taxes
Income tax expense was $17.8 million and $9.8 million for the quarters ended June 30, 2011 and 2010, respectively, resulting in effective tax rates of 15.7% and 9.6%, respectively. Our effective tax rate generally differs from the U.S. federal statutory rate of 35% due to favorable tax rates associated with earnings from lower tax rate jurisdictions throughout the world and our policy of indefinitely reinvesting earnings from certain jurisdictions (primarily in Europe), as well as due to additional accruals, changes in estimates, releases and settlements with taxing authorities related to our uncertain tax positions and benefits associated with income attributable to both domestic production activities and the extraterritorial income exclusion. During the quarters ended June 30, 2011 and 2010, the overall favorable effect of foreign tax rates on our effective tax rate was 12.0% and 10.7% of pre-tax earnings, respectively. During the quarters ended June 30, 2011 and 2010, we also recorded discrete net tax benefits of $6.2 million and $14.0 million, respectively, associated with tax authority settlements related to prior years’ tax matters which favorably impacted our effective tax rate by 5.5% and 13.7% of pre-tax earnings, respectively. Our effective tax rate could fluctuate on a quarterly basis and could be adversely affected to the extent earnings are lower than anticipated in countries with lower statutory rates and higher than anticipated in countries with higher statutory rates.
We file a federal income tax return in the United States as well as income tax returns in various local, state and foreign jurisdictions. Our tax years are closed with the United States Internal Revenue Service (IRS) through the tax year ended March 31, 2005. The IRS has completed the audit of our tax years ended March 31, 2006 and 2007 and all issues except one related to the year ended March 31, 2006 have been resolved. We received a Notice of Deficiency from the IRS related to this issue and in July 2011 filed a petition for hearing with the U.S. Tax Court. The IRS has completed its examination of our federal income tax return for the tax year ended March 31, 2008, and there were no un-agreed issues. In addition, certain tax years related to local, state and foreign jurisdictions remain subject to examination. To provide for potential tax exposures, we maintain a liability for unrecognized tax benefits which we believe is adequate.