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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2012
Income from Continuing Operations Before Income Taxes and Noncontrolling Interest | Income from continuing operations before income taxes and noncontrolling interest consisted of the following:
|  | Years ended December 31
In thousands |  | 2012 |  | 2011 |  | 2010
Federal (1) |  |  | $ | 39,177 |  |  |  | $ | (31,471 | ) |  |  | $ | 196,101 |
International |  |  |  | (223,142 | ) |  |  |  | 74,737 |  |  |  |  | 82,874 |
Income (loss) from continuing operations before income taxes and noncontrolling interest |  |  | $ | (183,965 | ) |  |  | $ | 43,266 |  |  |  | $ | 278,975 |
(1) As a result of the Merger, “Federal” reflects income (loss) from continuing operations before income taxes and noncontrolling interest for Switzerland in 2012 and U.S. for 2011 and 2010.
Provision for Income Taxes | The provision (benefit) for income taxes consisted of the following: For 2012, Federal represents Swiss taxes, while International represents non-Swiss taxes, including U.S. federal, state and local taxes. For 2011 and 2010 Federal represents U.S. federal taxes, while International reflects non-U.S. taxes.
|  | Years ended December 31 |
In thousands |  | 2012 |  |  | 2011 |  |  | 2010 |
Currently payable |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 6,490 |  |  | $ | 51,158 |  |  | $ | 44,766 |
State |  |  | — |  |  |  | 6,980 |  |  |  | 6,591 |
International |  |  | 61,053 |  |  |  | 24,005 |  |  |  | 17,877 |
Total current taxes |  |  | 67,543 |  |  |  | 82,143 |  |  |  | 69,234 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 1,270 |  |  |  | (26,223 | ) |  |  | 18,188 |
International |  |  | (148,166 | ) |  |  | (9,503 | ) |  |  | 1,521 |
Total deferred taxes |  |  | (146,896 | ) |  |  | (35,726 | ) |  |  | 19,709 |
Total provision (benefit) for income taxes |  | $ | (79,353 | ) |  | $ | 46,417 |  |  | $ | 88,943 |
Reconciliation of Federal Statutory Income Tax Rate to Effective Tax Rate | Reconciliations of the federal statutory income tax rate to our effective tax rate were as follows:
|  | Years ended December 31 |
Percentages |  | 2012 |  |  | 2011 |  |  | 2010 |
Federal statutory income tax rate (1) |  |  | 7.8 |  |  |  | 35.0 |  |  |  | 35.0 |
Tax effect of international operations (2) |  |  | 23.6 |  |  |  | (25.3 | ) |  |  | (4.1 | )
Non-deductible transaction costs |  |  | (4.7 | ) |  |  | — |  |  |  | — |
Impact of debt-financing |  |  | 10.8 |  |  |  | — |  |  |  | — |
Resolution of tax audits |  |  | 5.6 |  |  |  | — |  |  |  | — |
Goodwill |  |  | — |  |  |  | 104.4 |  |  |  | — |
Domestic manufacturing deduction |  |  | — |  |  |  | (8.4 | ) |  |  | (1.5 | )
State income taxes, net of federal tax benefit |  |  | — |  |  |  | 4.3 |  |  |  | 2.0 |
All other, net |  |  | — |  |  |  | (2.7 | ) |  |  | 0.5 |
Effective tax rate |  |  | 43.1 |  |  |  | 107.3 |  |  |  | 31.9 |
(1) As a result of the Merger, the statutory rate for 2012 reflects the Swiss statutory rate of 7.83 percent. For 2011 and 2010, the statutory rate reflects the U.S. statutory rate of 35 percent. (2) As a result of the Merger, the tax effect of international operations for 2012 consists of non-Swiss jurisdictions. For 2011 and 2010, the tax effect of international operations consists of non-U.S. jurisdictions.
Reconciliations of Gross Unrecognized Tax Benefits | Reconciliations of the beginning and ending gross unrecognized tax benefits were as follows:
|  | Years ended December 31 |
In thousands |  | 2012 |  |  | 2011 |  |  | 2010 |
Beginning balance |  | $ | 26,469 |  |  | $ | 24,260 |  |  | $ | 29,962 |
Gross increases for tax positions in prior periods |  |  | 2,198 |  |  |  | 2,042 |  |  |  | 286 |
Gross decreases for tax positions in prior periods |  |  | (641 | ) |  |  | (192 | ) |  |  | (2,490 | )
Gross increases based on tax positions related to the current year |  |  | 13,641 |  |  |  | 3,201 |  |  |  | 1,431 |
Gross decreases related to settlements with taxing authorities |  |  | (13,202 | ) |  |  | (2,465 | ) |  |  | (4,182 | )
Reductions due to statute expiration |  |  | (370 | ) |  |  | (377 | ) |  |  | (747 | )
Gross increases due to acquisitions |  |  | 25,938 |  |  |  | — |  |  |  | — |
Gross increases due to currency fluctuations |  |  | 438 |  |  |  | — |  |  |  | — |
Ending balance |  | $ | 54,471 |  |  | $ | 26,469 |  |  | $ | 24,260 |
Deferred Taxes | Deferred taxes were recorded in the Consolidated Balance Sheets as follows:
|  | December 31 |
In thousands |  | 2012 |  |  | 2011 |
Other current assets |  | $ | 68,277 |  |  | $ | 60,899 |
Other non-current assets |  |  | 89,040 |  |  |  | — |
Deferred tax liabilities |  |  | 488,102 |  |  |  | 188,957 |
Net deferred tax liabilities |  | $ | 330,785 |  |  | $ | 128,058 |
Tax Effects of Major Items Recorded as Deferred Tax Assets and Liabilities | The tax effects of the major items recorded as deferred tax assets and liabilities were as follows:
|  | December 31 |
In thousands |  | 2012 |  |  | 2011 |
Deferred tax assets |  |  |  |  |  |  |  |
Accrued liabilities and reserves |  | $ | 86,714 |  |  | $ | 58,420 |
Postretirement benefits |  |  | 79,065 |  |  |  | 82,823 |
Employee compensation & benefits |  |  | 95,170 |  |  |  | 49,404 |
Tax loss and credit carryforwards |  |  | 398,921 |  |  |  | 24,350 |
Other |  |  | 53,531 |  |  |  | 4,698 |
Total deferred tax assets |  |  | 713,401 |  |  |  | 219,695 |
Valuation allowance (1) |  |  | 167,640 |  |  |  | 13,242 |
Deferred tax assets, net of valuation allowance |  |  | 545,761 |  |  |  | 206,453 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | 97,370 |  |  |  | 43,572 |
Goodwill and other intangibles |  |  | 779,176 |  |  |  | 290,939 |
Total deferred tax liabilities |  |  | 876,546 |  |  |  | 334,511 |
Net deferred tax liabilities |  | $ | 330,785 |  |  | $ | 128,058 |
| (1) | The increase in valuation allowance from 2011 to 2012 was primarily related to balances acquired in the Merger.

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