We did not record any impairment charges for in-process research and development
(IPR&D) in fiscal 2012. In fiscal 2011, the business climate for the product
associated with the IPR&D from the acquisition of a privately-held company in
fiscal 2010, deteriorated significantly as the technology was no longer expected
to be designed into customer products and was determined to be other than
temporary and thus, the entire amount of the IPR&D of approximately
Non-operating Income (Expense), net. Non-operating income (expense), net, consisted primarily of interest income, interest expense, and other non-operating income and expense items. Our non-operating (expense) income, net for fiscal 2012 and fiscal 2011 was as follows (dollars in thousands):
Non-operating (Expense) Income, Net Percentage of Percentage of Increase/ Percentage 2012 Net Revenues 2011 Net Revenues (Decrease) Points Change
$432-% $(10,036)-2% $10,4682% Our non-operating income (expense), net, for fiscal 2012 compared to fiscal 2011 increased approximately $10.5 million, or 104%. The increase in non-operating income (expense), net was primarily due to a non-recurring impairment charge of approximately $9.2 millionrelated to our equity investment in a privately-held company in fiscal 2011. In fiscal 2011, the business climate of the privately-held company deteriorated significantly as the technology was no longer expected to be designed into customer products and was determined to be other than temporary and thus, the fair value of the privately-held company was deemed to be zero. As a result, the entire investment of approximately $9.2 millionin the privately-held company was impaired. In addition, the net increase was also due the absence of a one-time charge recorded in fiscal 2011 for the settlement of our notes receivable from ServerEngines in connection with the acquisition in August 2010, as required by the authoritative guidance for business combinations of approximately $0.4 million.
Income taxes. Our income tax provision for fiscal 2012 and fiscal 2011 was as follows (dollars in thousands):
Income Taxes Percentage of Percentage of Increase/ Percentage 2012 Net Revenues 2011 Net Revenues (Decrease) Points Change
$1,578-% $24,7635% $(23,185)-5% Our effective tax expense rate was approximately 17% and 42% for fiscal 2012 and fiscal 2011, respectively. Our effective tax rate was lower than the U.S. federal statutory rate primarily due to the majority of our earnings were generated from countries other than the U.S., including India, Ireland, and Isle of Man, where such earnings are generally subject to significantly lower tax rates than the U.S. The decrease in our income tax expense rate was primarily due to a platform contribution transaction entered into by our U.S. and international subsidiaries during fiscal 2011 that resulted in incremental U.S. tax expense of approximately $36.7 million. In addition, income taxes decreased in fiscal 2012 due to a reduction in non-deductible stock-based compensation expense related to the ServerEngines acquisition. During fiscal 2012 and fiscal 2011, the Company recorded a valuation allowance against certain U.S. federal and state deferred tax assets that impacted tax expense by approximately $14.6 millionand $17.3 million, respectively, based on our determination of the amount of deferred tax assets that were more likely than not to be realized.