Income Taxes

Income (loss) from continuing operations before income tax expense consists of the following for the three and nine months ended September 30:



	Three Months Ended						Nine Months Ended
	September 30						September 30
	2012			2011			2012			2011
United States	$	(10,694	)	$	2,595		$	(14,010	)	$	(2,819	)
Outside the United States	17,691			(49,328		)	9,770			19,245
Income (loss) from continuing operations before income tax expense	$	6,997		$	(46,733	)	$	(4,240	)	$	16,426

Effective income tax rate	25.1		%	(39.4		)%	(30.5		)%	149.1		%

Our effective income tax rates for the three and nine months ended September 30, 2012 are impacted by the charges related to the VAC inventory purchase accounting step-up and LCM charges ($0.2 million and $69.8 million for the three and nine months ended September 30, 2012, respectively). These rates are lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Germany, Finland, Malaysia and Taiwan) and a tax efficient financing structure, partially offset by losses in certain jurisdictions (including the U.S.) with no corresponding tax benefit. In the three and nine months ended September 30, 2012, there is no U.S. tax expense related to the planned repatriation of foreign earnings due to utilization of foreign tax credits and U.S. losses.

Our effective income tax rates for the three and nine months ended September 30, 2011 are affected by the acquisition of VAC, charges related to the VAC inventory purchase accounting step-up and LCM charges (totaling $93.5 million for the three and nine months ended September 30, 2011); acquisition-related expenses; discrete tax benefits related primarily to a partial reversal of an allowance against the GTL prepaid tax asset previously impaired; and the tax benefits of a post-acquisition tax restructuring of VAC. Excluding the impact of the VAC acquisition, charges related to the VAC inventory purchase accounting step-up and LCM charges and acquisition-related expenses, the effective income tax rates are lower than the U.S. statutory tax rate primarily due to income earned in tax jurisdictions with lower statutory rates than the U.S. (primarily Finland and Taiwan), a tax efficient financing structure and the effect of foreign currency translation, partially offset by losses in certain jurisdictions (including the U.S.) with no corresponding tax benefit. Our effective income tax rate for the three and nine months ended September 30, 2011 was also favorably impacted by a “tax holiday” from income taxes in Malaysia that expired December 31, 2011. In the three and nine months ended September 30, 2011, there is no U.S. tax expense related to the planned repatriation of foreign earnings due to utilization of foreign tax credits and U.S. losses.

In October 2012, we received a $37.5 million refund that was included in Refundable and prepaid income taxes on the Consolidated Balance Sheets as of September 30, 2012.