(8)	Income Taxes

Earnings before income taxes for the years ended December 31, 2012, 2011 and 2010 consisted of the following components (in thousands):

	2012		2011		2010
United States	$	430,573	$	359,800	$	270,281
Other		256,108		245,187		178,113
	$	686,681	$	604,987	$	448,394

Components of income tax expense for the years ended December 31, 2012, 2011 and 2010 were as follows (in thousands):

	2012			2011			2010
Current:
Federal	$	136,860		$	123,310		$	93,594
State		9,972			14,903			8,185
Foreign		48,403			41,437			32,706
Deferred:
Federal		15,789			1,846			(23,107	)
Foreign		(7,703	)		(3,756	)		14,436
	$	203,321		$	177,740		$	125,814

Reconciliations between the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012			2011			2010
Federal statutory rate		35.0	%		35.0	%		35.0	%
Foreign rate differential		(3.9	)		(3.7	)		(4.3	)
R&D tax credits		-			(0.7	)		(0.6	)
State taxes, net of federal benefit		1.7			1.7			1.6
Foreign tax credit		(2.4	)		-			(2.4	)
Other, net		(0.8	)		(2.9	)		(1.2	)
		29.6	%		29.4	%		28.1	%

The deferred income tax balance sheet accounts arise from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.

Components of the deferred tax assets and liabilities at December 31 were as follows (in thousands):

	2012		2011
Deferred tax assets:
Reserves and accrued expenses	$	63,703	$	72,150
Inventories		9,171		7,104
Net operating loss carryforwards		21,161		20,642
R&D credits		6,331		1,114
Foreign tax credits		20,270		-
Valuation allowance		-		-
Total deferred tax assets	$	120,636	$	101,010
Deferred tax liabilities:
Reserves and accrued expenses	$	10,766	$	33,861
Amortizable intangible assets		691,536		456,613
Plant and equipment		8,844		2,677
Total deferred tax liabilities	$	711,146	$	493,151

At December 31, 2012, Roper has approximately $34.3 million of U.S. federal net operating loss carryforwards. If not utilized, these carryforwards will expire in years 2023 through 2032. The net operating loss carryforward increased between 2011 and 2012 primarily because of losses incurred by a U.S. entity that is not a member of the Company's consolidated tax group and whose losses are therefore not available for offset against the taxable income of other members of the group. Also, due to a recent acquisition, the consolidated group has acquired a net operating loss subject to an IRC Section 382 limitation; however, the Company expects to utilize the entire net operating loss prior to expiration. The majority of the state net operating loss carryforward is related to Florida and, if not utilized, will expire in years 2027 through 2030. The Company has smaller net operating losses in various other states. Additionally, Roper has foreign tax credit carryforwards and R&D credit carryforwards. Roper has not recognized a valuation allowance on these attributes since management has determined that it is more likely than not that the results of future operations will generate sufficient taxable income to realize these deferred tax assets.

The Company provides income taxes for unremitted earnings of foreign subsidiaries that are not considered permanently reinvested overseas. As of December 31, 2012, the approximate amount of earnings of foreign subsidiaries that the Company considers permanently reinvested and for which deferred taxes have not been provided was approximately $1.05 billion. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be payable if such earnings were not reinvested indefinitely.

Although it is the Company's intention to permanently reinvest these earnings indefinitely there are certain events that would cause these earnings to become taxable. These events include, but are not limited to, change in U.S. tax laws, dividends paid between foreign subsidiaries in the absence of Section 954(c)(6) of the IRC, foreign subsidiary guarantees of U.S. parent debt and the liquidation of foreign subsidiaries or actual distributions by foreign subsidiaries into a U.S. affiliate.

The Company recognizes in the consolidated financial statements only those tax positions determined to be "more likely than not" of being sustained upon examination based on the technical merits of the positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2012			2011			2010
Beginning balance	$	19,556		$	24,765		$	22,922
Additions for tax positions of prior periods		1,371			470			203
Additions for tax positions of the current period		1,541			2,572			3,169
Additions due to acquisitions		9,116			-			3,546
Reductions for tax positions of prior periods		(197	)		(558	)		(565	)
Reductions for tax positions of the current period
Settlements with taxing authorities					(4,043	)		-
Lapse of applicable statute of limitations		(6,522	)		(3,650	)		(4,510	)
Ending balance	$	24,865		$	19,556		$	24,765

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $21.6 million. Interest and penalties related to unrecognized tax benefits are classified as a component of income tax expense and totaled $1.5 million in 2012. Accrued interest and penalties were $5.0 million at December 31, 2012 and $3.5 million at December 31, 2011. During the next twelve months, the unrecognized tax benefits are expected to decrease by a net $0.6 million, due mainly to a lapse in the applicable statute of limitations.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state, city and foreign jurisdictions. The Company's federal income tax returns for 2009 through the current period remain subject to examination and the relevant state, city and foreign statutes vary. There are no current tax examinations in progress where the Company expects the assessment of any significant additional tax in excess of amounts reserved.