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Income Taxes | 9 Months Ended
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Sep. 30, 2015
Income Taxes [Abstract] |
Income Taxes | 7. Income Taxes The following table presents components of income tax expense for the three and nine months ended September 30, 2015 and 2014:
|  | Three months ended September 30, |  | Nine months ended September 30,
(in thousands) |  | 2015 |  | 2014 |  | 2015 |  | 2014
Income tax based on income from continuing operations, at estimated tax rates of 38.0% and 34.9%, respectively | $ | 8,331 |  | $ | 6,470 |  | $ | 15,285 |  | $ | 19,226 |
Provision for change in estimated tax rates |  | (1,002 | ) |  | (243 | ) |  | - |  |  | - |
Income tax before discrete items |  | 7,329 |  |  | 6,227 |  |  | 15,285 |  |  | 19,226 |
Discrete tax expense/(benefit): |  |  |  |  |  |  |  |  |  |  |  |
Provision for/resolution of tax audits and contingencies, net |  | 4,521 |  |  | 330 |  |  | 4,505 |  |  | 1,310 |
Other discrete tax adjustments, net |  | 968 |  |  | - |  |  | 1,152 |  |  | 3 |
Adjustments to prior period tax liabilities |  | (581 | ) |  | 205 |  |  | (641 | ) |  | 459 |
Provision for/adjustment to beginning of year valuation allowance |  | - |  |  | - |  |  | - |  |  | 437 |
Enacted tax legislation |  | 6 |  |  | - |  |  | 97 |  |  | - |
Total income tax expense | $ | 12,243 |  | $ | 6,762 |  | $ | 20,398 |  | $ | 21,435 |
The third-quarter estimated effective tax rate on continuing operations was 38.0 percent in 2015, as compared to 34.9 percent for the same period in 2014. The Company records the residual U.S. and foreign taxes on certain amounts of current year foreign earnings that have been targeted for repatriation to the U.S. As a result, such amounts are not considered to be permanently reinvested, and the Company accrued as part of the income tax provision before discrete items, for the residual taxes on these earnings to the extent they cannot be repatriated in a tax-free manner. At September 30th, 2015, the Company had a deferred tax liability of $0.5 million on $9.4 million of prior year non-U.S. earnings that had been targeted for future repatriation to the U.S. We conduct business globally and, as a result, the Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including major jurisdictions such as the United States, Brazil, Canada, France, Germany, Italy, Mexico, and Switzerland. The open tax years in these jurisdictions range from 2000 to 2014. We are currently under audit in the U.S. and in other non-U.S. tax jurisdictions, including but not limited to Canada, Germany, Switzerland and Italy. It is reasonably possible that over the next twelve months the amount of unrecognized tax benefits may change within a range of a net increase of $4.4 million to a net decrease of $3.0 million, from the reevaluation of uncertain tax positions arising in examinations, in appeals, or in the courts, or from the closure of tax statutes. The Company previously recognized current and deferred tax benefits of approximately $25.3 million on their corporate income tax returns filed in Germany related to a 1999 reorganization that have been challenged by the German tax authorities in the course of an audit. In 2008 the German Federal Tax Court (FTC) denied tax benefits to other taxpayers in a case involving German tax laws relevant to our reorganization. One of these cases involved a non-German party, and in the ruling in that case, the FTC acknowledged that the German law in question may be violative of European Union (EU) principles and referred the issue to the European Court of Justice (ECJ) for its determination on this issue. In September 2009, the ECJ issued an opinion in this case that is generally favorable to the other taxpayer and referred the case back to the FTC for further consideration. In May 2010, the FTC released its decision, in which it resolved certain tax issues that may be relevant to our audit and remanded the case to a lower court for further development. In 2012, the lower court decided in favor of the taxpayer and the government appealed the findings to the FTC. On July 2, 2014, the FTC conducted a hearing in the aforementioned case involving the other taxpayer, and the taxpayer lost. The final written decision of the FTC was published during the fourth quarter of 2014. Although the decision of the FTC in the case is not determinative of the outcome in our case, management viewed the conclusion of this matter as an opportunity to approach the German tax authorities with the goal of a settlement agreement. We were required to pay tax and interest of approximately $14.5 million to the German tax authorities in order to pursue our appeal position. In anticipation of a settlement, a portion of the prepaid taxes and interest along with certain deferred tax assets were adjusted downward by $6.3 million in the third quarter of 2014 and by $5.8 million in the third quarter of 2015. The recognition of the uncertain tax position in deferred tax assets was partially offset by a reduction in a valuation allowance that offset the deferred tax assets. The remaining tax benefits sustained on the books are related to current tax benefits that were recognized in earlier tax years. Included in the range above are approximately $4.4 million of tax benefits that will continue to be challenged by the German tax authorities if the terms of the anticipated settlement were to change.

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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 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 2: 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 3: 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 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 + Details
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