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Income Tax Expense
 12 Months Ended
Dec. 31, 2011
Income Tax Expense [Abstract]  
Income Tax Expense
22. Income Tax Expense

Our income before income taxes, as well as the provision for income taxes, follows:

 

     Years Ended December 31  
     2011      2010      2009  

Income before income tax expense

         

Domestic

    $ 198,153       $ 149,640       $ 184,217   

Foreign

      105,564         110,356         55,159   
  

 

 

     

 

 

     

 

 

  
   $ 303,717       $ 259,996       $ 239,376   
  

 

 

     

 

 

     

 

 

  

Income tax expense

         

Current income taxes

         

Federal

    $ 55,909       $ 45,658       $ 51,374   

State

      9,996         4,470         5,337   

Foreign

      28,530         30,810         16,125   
  

 

 

     

 

 

     

 

 

  
     94,435         80,938         72,836   
  

 

 

     

 

 

     

 

 

  

Deferred income taxes

         

Federal

      1,380         1,319         4,768   

State

      230         62         (1,901 ) 

Foreign

      765         552         1,390   
  

 

 

     

 

 

     

 

 

  
     2,375         1,933         4,257   
  

 

 

     

 

 

     

 

 

  

Total income tax expense

    $ 96,810       $ 82,871       $ 77,093   
  

 

 

     

 

 

     

 

 

  

The reconciliation of the U.S. federal statutory rate to the effective income tax rate follows:

 

     % of Income
    Before Income Tax Expense    		  
     2011     2010     2009  

Federal statutory rate

      35.0 %      35.0 %      35.0 % 

State taxes, net of federal tax

      1.9        1.4        1.8   

Foreign operations

      (2.0 )      (1.8 )      (0.6 ) 

Impact of rate changes on deferred taxes

      0.0        (0.1 )      (0.7 ) 

Research tax credit

      (0.7 )      (0.7 )      (0.8 ) 

Domestic manufacturing tax benefit

      (2.4 )      (1.4 )      (2.0 ) 

Other items and adjustments

      0.1        (0.5 )      (0.5 ) 
  

 

 

    

 

 

    

 

 

  

Effective income tax rate

      31.9 %      31.9 %      32.2 % 
  

 

 

    

 

 

    

 

 

  

For those foreign subsidiaries that we have not determined their undistributed earnings to be indefinitely reinvested and based on available foreign tax credits and current U.S. income tax rates, we believe that we have adequately provided for any additional U.S. taxes that would be incurred when one of these foreign subsidiaries returns its earnings in cash to the United States.

Certain foreign operations have a U.S. tax impact due to our election to include their earnings in our federal income tax return.

 

Our deferred income tax assets and liabilities follow.

 

     December 31  
     2011      2010  

Deferred income tax assets

      

Future employee benefits

    $ 45,502       $ 37,931   

Environmental and future shutdown reserves

      7,751         7,977   

Loss on derivatives

      15,466         10,176   

Trademark expenses

      4,911         4,590   

Foreign currency translation adjustments

      4,713         2,800   

Litigation accruals

      1,289         1,474   

Financed intangible asset

      1,779         1,521   

Other

      3,465         2,034   
  

 

 

     

 

 

  
     84,876         68,503   
  

 

 

     

 

 

  

Deferred income tax liabilities

      

Depreciation and amortization

      25,664         21,646   

Intangibles

      5,067         8,272   

Inventory valuation and related reserves

      2,851         2,836   

Undistributed earnings of foreign subsidiaries

      4,995         4,073   

Other

      3,233         2,826   
  

 

 

     

 

 

  
     41,810         39,653   
  

 

 

     

 

 

  

Net deferred income tax assets

    $ 43,066       $ 28,850   
  

 

 

     

 

 

  

Reconciliation to financial statements

      

Deferred income tax assets—current

    $ 7,261       $ 6,876   

Deferred income tax assets—noncurrent

      35,805         21,974   
  

 

 

     

 

 

  

Net deferred income tax assets

    $ 43,066       $ 28,850   
  

 

 

     

 

 

  

Our deferred taxes are in a net asset position at December 31, 2011. Based on current forecast operating plans and historical profitability, we believe that we will recover nearly the full benefit of our deferred tax assets and have, therefore, recorded an immaterial valuation allowance at a foreign subsidiary.

A reconciliation of the beginning and ending balances of the unrecognized tax benefits from uncertain positions is as follows:

 

Balance at January 1, 2009

    $ 2,391   

Additions for tax positions of prior years

      200   

Reductions as a result of settlements with tax authorities

      (1,474 ) 

Decreases for tax positions of prior years

      (200 ) 
  

 

 

  

Balance at December 31, 2009

      917   

Additions for tax positions of prior years

      333   

Reductions as a result of settlements with tax authorities

      (200 ) 

Decreases for tax positions of prior years

      (317 ) 
  

 

 

  

Balance at December 31, 2010

      733   

Additions for tax positions of prior years

      200   

Reductions as a result of settlements with tax authorities

      (200 ) 

Decreases for tax positions of prior years

      (133 ) 
  

 

 

  

Balance at December 31, 2011

    $ 600   
  

 

 

  

 

All of the balance at December 31, 2011, if recognized, would affect our effective tax rate.

During the year ended December 31, 2011, we reduced the accrued interest associated with uncertain tax positions by an immaterial amount, resulting in net accrued interest of approximately $45 thousand. During the year ended December 31, 2010, we reduced the accrued interest associated with uncertain tax positions by an immaterial amount, resulting in a net accrued interest of approximately $50 thousand. During the year ended December 31, 2009, we reduced the accrued interest associated with uncertain tax positions by approximately $250 thousand, resulting in a net accrued interest of approximately $50 thousand. We recognize accrued interest and penalties associated with uncertain tax positions as part of income tax expense on our Consolidated Statements of Income.

We expect the amount of unrecognized tax benefits to change in the next twelve months; however, we do not expect the change to have a material impact on our financial statements.

Our U.S. subsidiaries join in the filing of a U.S. federal consolidated income tax return. We are no longer subject to U.S. federal income tax examinations for years before 2008. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from three to five years. Years still open to examination by foreign tax authorities in major jurisdictions include: the United Kingdom (2008 and forward); Singapore (2011 and forward); Japan (2008 and forward); Belgium (2008 and forward); and Canada (2004 and forward). We are currently under examination in various U.S. state and foreign jurisdictions.