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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes | Note 7. Income Taxes A roll-forward of unrecognized tax benefits and associated accrued interest and penalties is as follows:
(in millions) |  | Interest and Penalties |  |  | Unrecognized Tax Benefits |  |  | Total |
Opening balance at January 1, 2009 |  | $ | 3.5 |  |  | $ | 31.3 |  |  | $ | 34.8 |
Additions related to tax positions taken in the current period |  |  | 2.5 |  |  |  | 6.9 |  |  |  | 9.4 |
Additions for tax positions of prior periods |  |  | 0.4 |  |  |  | 0.0 |  |  |  | 0.4 |
Exchange effect |  |  | 0.2 |  |  |  | 1.2 |  |  |  | 1.4 |
Settlements |  |  | (2.8 | ) |  |  | (23.8 | ) |  |  | (26.6 | )
Closing balance at December 31, 2009 |  |  | 3.8 |  |  |  | 15.6 |  |  |  | 19.4 |
Current |  |  | (1.0 | ) |  |  | (4.0 | ) |  |  | (5.0 | )
Non-current |  | $ | 2.8 |  |  | $ | 11.6 |  |  | $ | 14.4 |
Opening balance at January 1, 2010 |  | $ | 3.8 |  |  | $ | 15.6 |  |  | $ | 19.4 |
Additions related to tax positions taken in the current period |  |  | 0.0 |  |  |  | 0.0 |  |  |  | 0.0 |
Additions for tax positions of prior periods |  |  | 0.1 |  |  |  | 2.0 |  |  |  | 2.1 |
Settlements |  |  | (3.6 | ) |  |  | (9.3 | ) |  |  | (12.9 | )
Closing balance at December 31, 2010 |  |  | 0.3 |  |  |  | 8.3 |  |  |  | 8.6 |
Current |  |  | (0.2 | ) |  |  | (2.0 | ) |  |  | (2.2 | )
Non-current |  | $ | 0.1 |  |  | $ | 6.3 |  |  | $ | 6.4 |
Opening balance at January 1, 2011 |  | $ | 0.3 |  |  | $ | 8.3 |  |  | $ | 8.6 |
Additions related to tax positions taken in the current period |  |  | 0.0 |  |  |  | 5.2 |  |  |  | 5.2 |
Additions for tax positions of prior periods |  |  | 0.2 |  |  |  | 0.5 |  |  |  | 0.7 |
Reductions for tax positions of prior periods |  |  | (0.1 | ) |  |  | (1.8 | ) |  |  | (1.9 | )
Closing balance at December 31, 2011 |  |  | 0.4 |  |  |  | 12.2 |  |  |  | 12.6 |
Current |  |  | (0.3 | ) |  |  | (2.9 | ) |  |  | (3.2 | )
Non-current |  | $ | 0.1 |  |  | $ | 9.3 |  |  | $ | 9.4 |
All of the $12.6 million of unrecognized tax benefits, and interest and penalties, would impact our effective tax rate if recognized. W e recognize accrued interest and penalties associated with uncertain tax positions as part of income taxes in our consolidated statements of income. The Company determined that a portion of the NewMarket Corporation civil complaint settlement (see Note 18), and associated legal and other professional expenses, would be tax deductible and accordingly recorded a $5.0 million addition to unrecognized tax benefits. During the third quarter of 2011, an additional $0.2 million was recorded in respect of acquisition-related costs; and there was a $1.8 million reduction in unrecognized tax benefits, and $0.1 million for associated interest and penalties, due to the expiration of applicable statutes of limitations for certain tax years. In the fourth quarter of 2011, the Company recorded a further $0.6 million addition for tax positions of prior periods in relation to U.S. state taxes and accrued interest. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. As at December 31, 2011, the Company's subsidiaries in the U.S. are subject to state tax audits in various states and the Company's German subsidiaries are subject to tax audits in Germany. The Company does not currently anticipate that adjustments, if any, arising out of these tax audits would result in a material change to its financial position as at December 31, 2011. The Company and its U.S. subsidiaries remain open to examination by the IRS for years 1998 to 2004 and 2007 onwards due to the net operating losses in the period 1998 to 2002, although no examination is currently underway. The Company's subsidiaries in foreign tax jurisdictions are open to examination including France (2009 onwards), Germany (2006 onwards), Switzerland (2010 onwards) and the United Kingdom (2008 onwards). The sources of income before income taxes were as follows:
(in millions) |  | 2011 |  |  | 2010 |  |  | 2009 |
Domestic |  | $ | (42.6 | ) |  | $ | 11.1 |  |  | $ | 8.3 |
Foreign |  |  | 95.2 |  |  |  | 59.6 |  |  |  | 10.0 |
|  | $ | 52.6 |  |  | $ | 70.7 |  |  | $ | 18.3 |
The components of income tax charges are summarized as follows:
(in millions) |  | 2011 |  |  | 2010 |  |  | 2009 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 5.4 |  |  | $ | 7.2 |  |  | $ | 2.0 |
Foreign |  |  | 13.6 |  |  |  | 4.0 |  |  |  | 10.4 |
|  |  | 19.0 |  |  |  | 11.2 |  |  |  | 12.4 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (12.8 | ) |  |  | (9.0 | ) |  |  | 0.3 |
Foreign |  |  | (2.5 | ) |  |  | (5.2 | ) |  |  | (0.8 | )
|  |  | (15.3 | ) |  |  | (14.2 | ) |  |  | (0.5 | )
|  | $ | 3.7 |  |  | $ | (3.0 | ) |  | $ | 11.9 |
Cash payments for income taxes were $18.1 million, $22.9 million and $8.6 million during 2011, 2010 and 2009, respectively. The effective tax rate varies from the U.S. federal statutory rate because of the factors indicated below:
|  | 2011 |  |  | 2010 |  |  | 2009 |
Statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Foreign income inclusions |  |  | 20.5 |  |  |  | 7.1 |  |  |  | 23.0 |
Impairment of Octane Additives segment goodwill |  |  | 1.3 |  |  |  | 1.1 |  |  |  | 4.3 |
Foreign tax credits |  |  | (25.8 | ) |  |  | (7.1 | ) |  |  | (18.8 | )
Pension charge |  |  | (8.9 | ) |  |  | 0.5 |  |  |  | (8.0 | )
Foreign tax rate differential |  |  | (19.1 | ) |  |  | (13.5 | ) |  |  | (18.8 | )
Unrecognized net operating losses |  |  | 0.0 |  |  |  | 0.0 |  |  |  | (10.5 | )
Permanent tax adjustments |  |  | 0.3 |  |  |  | (2.1 | ) |  |  | 5.8 |
Amortization |  |  | 0.7 |  |  |  | 1.7 |  |  |  | (0.2 | )
Tax (credit)/charge from previous years |  |  | (1.9 | ) |  |  | (2.9 | ) |  |  | 65.1 |
Net charge/(credit) from unrecognized tax benefits |  |  | 7.7 |  |  |  | (15.3 | ) |  |  | (92.1 | )
OFFP/FCPA settlement accrual |  |  | 0.0 |  |  |  | (5.6 | ) |  |  | 76.7 |
United Kingdom income tax rate reduction |  |  | (4.8 | ) |  |  | (1.6 | ) |  |  | 0.0 |
Other items and adjustments, net |  |  | 2.0 |  |  |  | (1.5 | ) |  |  | 3.5 |
|  |  | 7.0 | % |  |  | (4.2 | )% |  |  | 65.0 | %
Significant factors affecting the variation to statutory rate are set out above and include foreign income inclusions net of foreign tax credits. There was an unfavorable impact from an increase in the Company's unrecognized tax benefits position primarily in respect of the NewMarket Corporation civil complaint settlement. There was a favorable impact from the 2% reduction in the United Kingdom's corporate tax rate primarily in respect of the unrecognized actuarial net losses associated with the United Kingdom defined benefit pension plan. The mix of taxable profits generated in the different geographical localities in which the Group operates had a significant positive impact on the effective tax rate in 2011. Details of deferred tax assets and liabilities are as follows:
(in millions) |  | 2011 |  |  | 2010 |
Deferred tax assets: |  |  |  |  |  |  |  |
Foreign tax credits |  | $ | 19.6 |  |  | $ | 13.5 |
Accrued expenses |  |  | 8.8 |  |  |  | 7.7 |
Stock options |  |  | 4.0 |  |  |  | 3.5 |
Excess of tax over book basis in property, plant and equipment |  |  | 1.2 |  |  |  | 2.6 |
Net operating loss carry forwards |  |  | 0.8 |  |  |  | 0.6 |
Pension liability |  |  | 0.0 |  |  |  | 4.3 |
Other |  |  | 5.5 |  |  |  | 5.3 |
|  |  | 39.9 |  |  |  | 37.5 |
Valuation allowance |  |  | (7.5 | ) |  |  | (10.8 | )
Total deferred tax assets |  |  | 32.4 |  |  |  | 26.7 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Goodwill amortization |  |  | (6.5 | ) |  |  | (4.7 | )
Pension asset |  |  | (5.4 | ) |  |  | 0.0 |
Intangible assets |  |  | (1.5 | ) |  |  | (3.5 | )
Other |  |  | (2.2 | ) |  |  | (5.8 | )
Total deferred tax liabilities |  |  | (15.6 | ) |  |  | (14.0 | )
Total net deferred tax asset |  | $ | 16.8 |  |  | $ | 12.7 |
Deferred taxes are included within the consolidated balance sheets as follows: |  |  |  |  |  |  |  |
Deferred tax assets |  | $ | 19.7 |  |  | $ | 13.8 |
Deferred tax liabilities |  |  | (2.9 | ) |  |  | (1.1 | )
|  | $ | 16.8 |  |  | $ | 12.7 |
Details of the deferred tax asset valuation allowance are as follows:
(in millions) |  | 2011 |  |  | 2010 |  |  | 2009 |
At January 1 |  | $ | (10.8 | ) |  | $ | (4.4 | ) |  | $ | (7.3 | )
Change in foreign tax credits |  |  | 3.3 |  |  |  | (6.4 | ) |  |  | 1.0 |
Change in net operating loss carry forwards |  |  | 0.0 |  |  |  | 0.0 |  |  |  | 1.9 |
At December 31 |  | $ | (7.5 | ) |  | $ | (10.8 | ) |  | $ | (4.4 | )
As a result of the Company's assessment of its net deferred tax assets at December 31, 2011, the Company considers it more likely than not that no valuation allowance is required for $0.8 million (2010 – $0.6 million) of its net operating loss carry forwards and that a partial valuation allowance is required against its foreign tax credit carry forwards. The net operating loss carry forwards arose in the U.S. in the current period and prior periods as a result of trading and state tax losses. It is expected that sufficient taxable profits will be generated against which these net operating loss carry forwards can be relieved. The foreign tax credit carry forwards arose in the U.S. in the current period and in prior periods. The Company has determined that future foreign income inclusions will be sufficient to utilize approximately $12.1 million (2010 – $2.7 million) of the foreign tax credit carry forwards prior to their expiration and therefore only a partial valuation allowance is required. Should it be determined in the future that it is no longer more likely than not that these assets will be realized, an additional valuation allowance would be required, and the Company's operating results would be adversely affected during the period in which such a determination would be made. During 2011 a dividend of $40.5 million was remitted from the Company's overseas subsidiaries to the U.S.. The dividend was one-off in nature and no future remittances are expected to be made. The Company is in a position to control whether or not to repatriate foreign earnings. No taxes have been provided for the unremitted earnings of our overseas subsidiaries as any tax basis differences relating to investments in these overseas subsidiaries are considered to be permanent in duration. The amount of unremitted earnings at December 31, 2011 and 2010 was approximately $665 million and $637 million, respectively.

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- 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 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: 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 Reference 6: 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 7: 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 8: 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=6881521&loc=d3e23780-122690 + Details
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