OThER INcOME aND EXPENsE:  INcOME TaX EXPENsE: DIscONTINuED OPERaTIONs: The equity investment impairment loss for 2009 reflects an impairment loss on two of the Company’s joint ventures, ICS for $4.7 million  and Endorsia International AB (Endorsia) for $1.4 million. The Company recorded the impairment loss as a result of the carrying value of  these investments exceeding the expected future cash flows of these joint ventures. The effective tax rate on the pretax income for 2010 was favorable relative to the U.S. federal statutory rate primarily due to earnings  in certain foreign jurisdictions where the effective tax rate is less than 35%, the U.S. manufacturing deduction, the U.S. research tax  credit and the net effect of other U.S. tax items, partially offset by losses at certain foreign subsidiaries where no tax benefit could be  recorded, and U.S. state and local taxes. The effective tax rate for 2010 also includes the net impact of a $21.6 million charge in the first  quarter to record the deferred tax impact of the PPACA, partially offset by a $19.8 million tax benefit in the fourth quarter to record the  benefit of contributions made to a newly established VEBA trust to fund certain retiree healthcare costs. The effective tax rate on the pretax loss for 2009 was unfavorable relative to the U.S. federal statutory tax rate primarily due to losses  at certain foreign subsidiaries where no tax benefit could be recorded. This item was partially offset by the U.S. research tax credit and  the net effect of other items. In December 2009, the Company completed the divestiture of its NRB operations to JTEKT Corporation (JTEKT). Discontinued  operations represent operating results of the NRB operations for 2009 and the gain (loss) on disposal of these operations for 2010 and  2009. For 2009, the operating results, net of tax, of the NRB operations were a loss of $60.0 million, primarily due to the deterioration  of the markets served by the NRB operations and higher restructuring charges in 2009. The restructuring charges include a pretax  impairment loss of $33.7 million and pension curtailment of $2.2 million, as well as other pretax charges related to severance and  related benefits of $16.0 million. The impairment loss was the result of the projected proceeds from the sale of NRB operations being  lower than the net book value of the net assets expected to be transferred as a result of the sale of the NRB operations to JTEKT. In  2009, the Company recorded a loss on disposal of $12.6 million, net of tax. In 2010, the Company recognized a gain on disposal of $7.4 million, net of income taxes, as a result of a favorable working capital  adjustment. The working capital adjustment was partially offset by a correction of an error of $1.3 million, net of income taxes, related  to a foreign currency translation adjustment for the Company’s Canadian operations that were sold as part of the NRB divestiture. The  Company realized during the third quarter of 2010 that this adjustment should have been written-off in the fourth quarter of 2009 and  recognized as part of the loss on the sale of the NRB operations. Management of the Company concluded the effect of this adjustment  was immaterial to the Company’s 2009 and 2010 financial statements. Refer to Note 2 – Acquisitions and Divestitures in the Notes to  the Consolidated Financial Statements for additional discussion. 28 THE TIMKEN COMPANY 2010 2009 $ Change  % Change  CDSOA receipts, net of expenses $ 2.0 $ 3.6 $ (1.6) (44.4)% Equity investment impairment loss –  (6.1)  6.1  100.0 %  Other  1.8   2.4   (0.6) (25.0)% Other income (expense), net  $ 3.8 $ (0.1) $ 3.9 NM 2010 2009 $   Change  Change  Income tax expense (benefit) $ 136.0 $ (28.2) $ 164.2 NM Effective tax rate  33.5% 29.9%  –  360 bps 2010 2009 $   Change  % Change  Operating results, net of tax $  – $ (60.0) $ 60.0 100.0%  Gain (loss) on disposal, net of tax  7.4   (12.6)  20.0  158.7%  Income (loss) from discontinued operations,  net of income taxes $ 7.4 $ (72.6) $ 80.0 110.2% ManageMent’s Discussion anDanalysis of financial conDition anD Results of opeRations