Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Summary of earnings from continuing operations

Earnings from continuing operations are summarized below:



(in millions)	2013		2012		2011
Earnings (loss) from continuing operations before income taxes:
Domestic	$	90.1	$	94.1	$	(24.8	)
Foreign	135.1		52.8		71.1
Total	$	225.2	$	146.9	$	46.3

Schedule of the provision for taxes on earnings (loss) from continuing operations

Income tax expense (benefit) from continuing operations is summarized as follows:



(in millions)	2013			2012			2011
Current:
Federal and state	$	24.1		$	29.2		$	(20.9	)
Foreign	25.4			17.3			17.2
Total current	$	49.5		$	46.5		$	(3.7	)
Deferred:
Federal and state	$	(15.2	)	$	(5.2	)	$	13.6
Foreign	1.8			(3.3		)	3.7
Total deferred	$	(13.4	)	$	(8.5	)	$	17.3
Provision for taxes on earnings	$	36.1		$	38.0		$	13.6

Reconciliation of the federal statutory income tax rate to the company's effective income tax rate for continuing operations

The federal statutory income tax rate is reconciled to the company’s effective income tax rate for continuing operations for the years ended December 31, 2013, 2012 and 2011 as follows, which excludes the impact of discontinued operations which had an effective tax rate of (13.3)% for 2013:



	2013		2012		2011
Federal income tax at statutory rate	35.0	%	35.0	%	35.0	%
State income provision (benefit)	(0.5	)	0.3		(10.2	)
Manufacturing & research incentives	(3.3	)	(3.5	)	(4.3	)
Taxes on foreign income which differ from the U.S. statutory rate	(9.3	)	(7.7	)	(24.1	)
Adjustments for unrecognized tax benefits	(5.4	)	(6.7	)	7.2
Adjustments for valuation allowances	(1.0	)	9.2		20.2
Other items	0.5		(0.7	)	5.6
Effective tax rate	16.0	%	25.9	%	29.4	%

Schedules of deferred tax assets (liabilities)

Temporary differences and carryforwards that give rise to deferred tax assets and liabilities include the following items:



(in millions)	2013			2012
Current deferred tax assets (liabilities):
Inventories	$	32.3		$	26.0
Accounts receivable	(2.1		)	(1.2		)
Product warranty reserves	20.0			20.4
Product liability reserves	7.9			8.7
Deferred revenue, current portion	0.6			2.9
Deferred employee benefits	16.6			13.2
Other reserves and allowances	16.1			21.2
Less valuation allowance	(3.6		)	(7.0		)
Net deferred tax assets, current	$	87.8		$	84.2
Non-current deferred tax assets (liabilities):
Property, plant and equipment	$	(32.6	)	$	(33.1	)
Intangible assets	(296.3		)	(310.4		)
Deferred employee benefits	67.1			71.0
Product warranty reserves	4.2			2.5
Tax credits	2.3			1.7
Net operating loss carryforwards	192.7			211.3
Deferred revenue	5.9			4.8
Other	(2.4		)	(3.6		)
Total non-current deferred tax liabilities	(59.1		)	(55.8		)
Less valuation allowance	(146.2		)	(151.0		)
Net deferred tax liabilities, non-current	$	(205.3	)	$	(206.8	)

The net deferred tax assets (liabilities) are reflected in the Consolidated Balance Sheets for the years ended December 31, 2013 and December 31, 2012 as follows:



(in millions)	2013			2012
Current income tax asset	$	89.9		$	88.3
Long-term income tax assets, included in other non-current assets	9.0			13.8
Current deferred income tax liability, included in accounts payable and accrued expenses	(2.1		)	(4.1		)
Long-term deferred income tax liability	(214.3		)	(220.6		)
Net deferred income tax liability	$	(117.5	)	$	(122.6	)

Schedule of open tax years for which the company could be subject to income tax examination

The following table provides the open tax years for which the company could be subject to income tax examination by the tax authorities in its major jurisdictions:



Jurisdiction		Open Years
U.S. Federal		2007 — 2013
Wisconsin		2009 — 2013
China		2005 — 2013
France		2009 — 2013
Germany		2006 — 2013

Reconciliation of the beginning and ending amount of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011 is as follows:



(in millions)	2013			2012			2011
Balance at beginning of year	$	47.3		$	56.3		$	45.2
Additions based on tax positions related to the current year	2.0			1.8			1.7
Additions for tax positions of prior years	3.7			3.6			17.1
Reductions for tax positions of prior years	(0.2		)	—			(1.7		)
Reductions based on settlements with taxing authorities	(11.5		)	(13.0		)	(5.4		)
Reductions for lapse of statute	(5.4		)	(1.4		)	(0.6		)
Balance at end of year	$	35.9		$	47.3		$	56.3

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

+ References+ Details