XML 104 R23.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Taxes | Note 14: Income Taxes
|  | Years ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (In thousands) |
Income (loss) from continuing operations before taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States operations |  | $ | 31,678 |  |  | $ | (22,533 | ) |  | $ | 27,324 |
Foreign operations |  |  | 95,371 |  |  |  | 27,575 |  |  |  | 90,775 |
Income from continuing operations before taxes |  | $ | 127,049 |  |  | $ | 5,042 |  |  | $ | 118,099 |
Income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Currently payable |  |  |  |  |  |  |  |  |  |  |  |
United States federal |  | $ | (4,493 | ) |  | $ | (6,944 | ) |  | $ | (4,741 | )
United States state and local |  |  | (26 | ) |  |  | (2,519 | ) |  |  | 1,303 |
Foreign |  |  | 21,377 |  |  |  | 14,020 |  |  |  | 18,572 |
|  |  | 16,858 |  |  |  | 4,557 |  |  |  | 15,134 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
United States federal |  |  | 3,575 |  |  |  | (22,661 | ) |  |  | (1,276 | )
United States state and local |  |  | 1,593 |  |  |  | (424 | ) |  |  | (799 | )
Foreign |  |  | 289 |  |  |  | (19,666 | ) |  |  | 3,732 |
|  |  | 5,457 |  |  |  | (42,751 | ) |  |  | 1,657 |
Income tax expense (benefit) |  | $ | 22,315 |  |  | $ | (38,194 | ) |  | $ | 16,791 |
In addition to the above income tax expense (benefit) associated with continuing operations, we also recorded income tax expense associated with discontinued operations of $1.4 million, $78.7 million, and $7.6 million in 2013, 2012, and 2011, respectively. In 2013, our income tax expense was reduced by $2.5 million due to a tax holiday for our operations in St. Kitts. The tax holiday in St. Kitts is scheduled to expire in 2022.
|  | Years Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Effective income tax rate reconciliation from continuing operations: |  |  |  |  |  |  |  |  |  |  |  |
United States federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State and local income taxes |  |  | 1.5 | % |  |  | (10.7 | %) |  |  | 0.8 | %
Impact of change in deferred tax asset valuation allowance |  |  | (0.6 | %) |  |  | (187.8 | %) |  |  | (6.8 | %)
Impact of change in tax contingencies |  |  | 3.8 | % |  |  | 3.3 | % |  |  | (1.1 | %)
Impact of change in United States tax legislation |  |  | (3.3 | %) |  |  | 0.0 | % |  |  | 0.0 | %
Foreign income tax rate differences |  |  | (12.1 | %) |  |  | (278.1 | %) |  |  | (6.8 | %)
Federal and state impact of Cooper liability settlement |  |  | 0.0 | % |  |  | (416.5 | %) |  |  | 0.0 | %
Domestic permanent differences & tax credits |  |  | (6.7 | %) |  |  | 97.3 | % |  |  | (6.9 | %)
|  |  | 17.6 | % |  |  | (757.5 | %) |  |  | 14.2 | %
With respect to the effective income tax rate reconciliation for 2012, the individual percentages reflected are significant due to the dollar value of such items relative to the $5.0 million of consolidated pre-tax income in 2012. The most significant factors impacting the rate and the total income tax benefit of $38.2 million in 2012 include the Cooper Industries tax agreement settlement and the reduction of the deferred tax asset valuation allowance, both of which are discussed further below. Deferred income taxes have been established for differences in the basis of assets and liabilities for financial statement and tax reporting purposes. For 2012 and prior, these amounts included adjustments for a tax sharing agreement with Cooper Industries (Cooper). This agreement required us to pay Cooper the majority of the tax benefits resulting from basis adjustments arising from the initial public offering of our stock on October 6, 1993. The effect of the Cooper tax agreement was to put us in the same financial position we would have been in had there been no increase in the tax basis of our intangible assets (except for a retained 10% benefit). The retained 10% benefit had no impact on our consolidated income tax expense for 2011 and 2010, and we did not pay any taxes to Cooper in accordance with the tax agreement during those years. In 2011, Cooper sued us in Texas state court for amounts allegedly owed by us under the tax sharing agreement. As a result of a final settlement reached with Cooper in 2012, the tax sharing agreement has been terminated. We paid a final settlement amount of $30 million in 2013 and recorded a tax benefit of $21.0 million in our 2012 tax provision. In 2012, we recorded a $9.5 million tax benefit due to a net reduction in valuation allowances associated with our ability to realize deferred tax assets related to net operating losses and tax credits in various jurisdictions. We evaluated and assessed the expected utilization of net operating losses, future book and taxable income, available tax planning strategies, and our overall deferred tax position to determine the appropriate amount and timing of valuation allowance adjustments. As a result of changes in our business, available tax planning strategies, and future taxable income projections, we determined that the weight of evidence regarding the future realizability of the deferred tax assets had become predominately positive and realization of the deferred tax assets was more likely than not.
|  | December 31, |
|  | 2013 |  |  | 2012 |
|  | (In thousands) |
Components of deferred income tax balances: |  |  |  |  |  |  |  |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Plant, equipment, and intangibles |  | $ | (97,229 | ) |  | $ | (89,433 | )
Deferred income tax assets: |  |  |  |  |  |  |  |
Postretirement, pensions, and stock compensation |  |  | 27,592 |  |  |  | 44,814 |
Reserves and accruals |  |  | 33,788 |  |  |  | 22,042 |
Net operating loss and tax credit carryforwards |  |  | 88,307 |  |  |  | 84,716 |
Valuation allowances |  |  | (10,165 | ) |  |  | (7,498 | )
|  |  | 139,522 |  |  |  | 144,074 |
Net deferred income tax asset |  | $ | 42,293 |  |  | $ | 54,641 |
The decrease in net deferred income tax assets during 2013 stems primarily from a reduction of deferred tax assets associated with our pension and postretirement liabilities. The increase in our valuation allowance during 2013 primarily relates to valuation allowances on net operating loss carryforwards recorded for our acquisition of Miranda. As of December 31, 2013, we had $220.6 million of net operating loss carryforwards and $53.0 million of tax credit carryforwards. Unless otherwise utilized, net operating loss carryforwards will expire as follows: $28.4 million in 2014, $44.4 million in 2015, $35.9 million between 2016 and 2018, and $68.3 million between 2019 and 2033. Net operating losses with an indefinite carryforward period total $43.6 million. Of the $220.6 million in net operating loss carryforwards, we have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $145.9 million of these net operating loss carryforwards within their respective expiration periods. Unless otherwise utilized, tax credit carryforwards of $50.5 million will expire as follows: $31.0 million between 2018 and 2022 and $19.5 million between 2026 and 2033. Tax credit carryforwards with an indefinite carryforward period total $2.5 million. We have determined, based on the weight of all available evidence, both positive and negative, that we will utilize all of these tax credit carryforwards within their respective expiration periods. The following tables summarize our net operating loss carryforwards and tax credit carryforwards as of December 31, 2013 by jurisdiction:
|  | Net Operating Loss Carryforwards |
|  | (In thousands) |
United States - various states |  | $ | 120,233 |
Netherlands |  |  | 54,900 |
Australia |  |  | 18,359 |
Germany |  |  | 16,781 |
Other |  |  | 10,313 |
Total |  | $ | 220,586 |
|  | Tax Credit Carryforwards |
|  | (In thousands) |
United States |  | $ | 34,172 |
Canada |  |  | 18,850 |
Total |  | $ | 53,022 |
In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations. As a result, as of December 31, 2013, we have not made a provision for U.S. or additional foreign withholding taxes on approximately $478.3 million of the undistributed earnings of foreign subsidiaries that are essentially permanent in duration. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practical to estimate the amount of the deferred tax liability related to investments in these foreign subsidiaries that would be payable if we were not indefinitely reinvested. In 2013, we recognized a net $1.3 million increase to reserves for uncertain tax positions. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
|  | 2013 |  |  | 2012 |
|  | (In thousands) |
Balance at beginning of year |  | $ | 17,377 |  |  | $ | 23,199 |
Additions based on tax positions related to the current year |  |  | 1,932 |  |  |  | 1,001 |
Additions for tax positions of prior years |  |  | 3,761 |  |  |  | 8,928 |
Reductions for tax positions of prior years - Settlement |  |  | (2,490 | ) |  |  | (640 | )
Reduction for tax positions of prior years - Statute of limitations |  |  | (1,941 | ) |  |  | (15,111 | )
Balance at end of year |  | $ | 18,639 |  |  | $ | 17,377 |
The majority of the additions for tax positions of prior years relates to income tax audits in foreign jurisdictions. The balance of $18.6 million at December 31, 2013, reflects tax positions that, if recognized, would impact our effective tax rate. As of December 31, 2013, we believe it is reasonably possible that $7.2 million of unrecognized tax benefits will change within the next twelve months primarily attributable to the expiration of several statutes of limitations and completion of tax audits in various jurisdictions. Our practice is to recognize interest and penalties related to uncertain tax positions in interest expense and operating expenses, respectively. During 2013, 2012, and 2011, we recognized approximately $1.7 million, $0.1 million, and $1.0 million, respectively, in interest expense. We have approximately $2.8 million and $1.4 million accrued for the payment of interest and penalties as of December 31, 2013 and 2012, respectively. Our federal, state, and foreign income tax returns for the tax years 2007 and later remain subject to examination by the Internal Revenue Service and by various state and foreign tax authorities.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration