Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Data from Continuing Operations

For each of the three years ended December 31, 2012, the tax data related to continuing operations is as follows:


	2012			2011			2010
Income (loss) components:
United States	$	33.0		$	(464.4	)	$	(392.0	)
International		116.1			148.5			119.4
Income (loss) from continuing operations before income tax		149.1			(315.9	)		(272.6	)
Income tax expense (benefit) components:
Current income tax expense (benefit):
United States – federal		(32.6	)		(78.9	)		(59.5	)
United States – state and local		(8.7	)		(12.1	)		–
International		46.8			49.2			27.7
Total current income tax expense (benefit)		5.5			(41.8	)		(31.8	)
Deferred income tax expense (benefit) components:
United States – federal		40.1			318.2			(98.7	)
United States – state and local		9.9			(14.6	)		(15.3	)
International		(15.9	)		(1.2	)		3.6
Total deferred income tax expense (benefit)		34.1			302.4			(110.4	)
Income tax expense (benefit)	$	39.6		$	260.6		$	(142.2	)
Effective income tax rate		26.6	%		(82.5	)%		52.2	%

Reconciliation of Tax Provision for Continuing Operations

A reconciliation of the income tax expense (benefit) for continuing operations from the U.S. statutory income tax rate to the effective income tax rate is as follows for each of the three years ended December 31, 2012:


	2012			2011			2010
Tax provision at U.S. statutory rate		35.0	%		35.0	%		35.0	%
Valuation allowance on deferred tax assets		27.7			(108.1	)		14.1
Tax exempt interest		(19.7	)		4.1			2.4
Audit settlements		(13.2	)		–			–
Foreign tax rate differential		(3.0	)		1.2			0.2
U.S. permanent items		2.7			–			–
Tax credits		(2.0	)		7.2			12.6
State and local income tax		1.4			0.5			5.6
Tax on undistributed foreign earnings		1.3			(21.8	)		–
Medicare Part D subsidy		(1.1	)		0.4			(4.2	)
U.S. tax on foreign earnings		0.3			(6.8	)		(16.0	)
Change in state tax rate		—			9.7			–
Other adjustments		(2.8	)		(3.9	)		2.5
Effective income tax rate		26.6	%		(82.5	)%		52.2	%

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities include the following:


	2012			2011
Deferred Tax Assets:
Accruals	$	349.3		$	354.8
Employee benefits		136.7			134.7
Credit carryforwards		42.3			34.7
Loss carryforwards		99.6			65.1
Other		33.9			38.5
Subtotal		661.8			627.8
Valuation allowance		(493.9	)		(435.2	)
Net deferred tax assets	$	167.9		$	192.6
Deferred Tax Liabilities:
Undistributed earnings	$	(71.4	)	$	(69.3	)
Intangibles		(59.2	)		(49.1	)
Accelerated depreciation		(25.0	)		(20.0	)
Investment		(0.7	)		(0.7	)
Total deferred tax liabilities	$	(156.3	)	$	(139.1	)
Net deferred taxes	$	11.6		$	53.5

Deferred Taxes in Consolidated Balance Sheets

Deferred taxes are presented in the Consolidated Balance Sheets as follows:


	2012			2011
Current assets	$	19.9		$	23.9
Non-current assets		21.4			45.4
Current liabilities		(3.5	)		(2.2	)
Other non-current liabilities		(26.2	)		(13.6	)
Net deferred taxes	$	11.6		$	53.5

Attributes Available for Utilization

We have the following tax attributes available for utilization at December 31, 2012:


ATTRIBUTE	AMOUNT		FIRST YEAR OF EXPIRATION
U.S. federal net operating losses	$	2.6		12/31/2023
U.S. state net operating losses		2,478.9		12/31/2013
U.S. federal tax credits		35.3		12/31/2020
U.S. state tax credits		7.8		12/31/2013
Foreign net operating losses		212.4		12/31/2013

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits for each of the three years ended December 31, 2012 is as follows:


	2012			2011			2010
Unrecognized tax benefits – January 1	$	198.7		$	203.4		$	183.5
Additions for:
Prior year tax positions		48.4			1.5			17.0
Current year tax positions		0.8			15.1			48.1
Assumed in acquisition		3.8			—			4.8
Reductions for:
Prior year tax positions		(4.8	)		(21.2	)		(38.0	)
Settlements		(33.6	)		—			(12.0	)
Lapse of statute		(4.6	)		(0.1	)		—
Unrecognized tax benefits – December 31	$	208.8		$	198.7		$	203.4

Open Tax Years by Major Jurisdiction

In many cases, uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. During 2012, the IRS closed its examination of the Company’s tax returns for the years 2007 and 2008. Also during 2012, the German tax authority closed its examination of the Company’s 2005 tax return. The following table summarizes the earliest open tax years by major jurisdiction as of December 31, 2012:


Jurisdiction		Earliest Open Year
Germany		2006
Italy		2007
Japan		2010
Korea		2008
United States		2009