XML 96 R20.htm IDEA: XBRL DOCUMENT
v2.4.0.6

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2012
INCOME TAXES |
INCOME TAXES | NOTE 11: INCOME TAXES Income from continuing operations before provision (benefit) for income taxes are taxed under the following jurisdictions:
Year Ended December 31, |  | 2012 |  | 2011 |  | 2010 |
Domestic |  | $ | 17,625 |  | $ | 2,338 |  | $ | 4,453 |
Foreign |  | 17,871 |  | 19,674 |  | 9,537 |
Total |  | $ | 35,496 |  | $ | 22,012 |  | $ | 13,990 |
Components of the provision (benefit) for income taxes from continuing operations for each of the three years in the period ended December 31, 2012 are as follows:
Year Ended December 31, |  | 2012 |  | 2011 |  | 2010 |
Current: |  |  |  |  |  |  |
Federal |  | $ | 1,901 |  | $ | 4,094 |  | $ | 3,330 |
State |  | 248 |  | 961 |  | (306 | )
Foreign |  | 3,835 |  | 4,429 |  | 369 |
Subtotal |  | 5,984 |  | 9,484 |  | 3,393 |
Deferred: |  |  |  |  |  |  |
Federal |  | 2,303 |  | (4,408 | ) | 2,149 |
State |  | 1,207 |  | (719 | ) | 1,186 |
Foreign |  | 622 |  | 54 |  | (1,207 | )
Subtotal |  | 4,132 |  | (5,073 | ) | 2,128 |
Total provision for income taxes |  | $ | 10,116 |  | $ | 4,411 |  | $ | 5,521 |
The provision for income taxes from continuing operations, as a percentage of income before provision for income taxes, differs from the statutory U.S. federal income tax rate due to the following:
Year Ended December 31, |  | 2012 |  | 2011 |  | 2010 |
Statutory U.S. federal income tax rate |  | 35.0 | % | 35.0 | % | 35.0 | %
State income taxes, net of U.S. federal income tax benefit |  | 2.7 |  | 0.7 |  | 4.1 |
U.S. tax impact of foreign operations |  | 0.2 |  | (15.1 | ) | 13.5 |
Valuation allowance change |  | (3.9 | ) | (0.3 | ) | 20.9 |
Tax contingencies |  | (1.0 | ) | (1.4 | ) | 1.8 |
Foreign exchange gains (losses) |  | — |  | — |  | (10.1 | )
Gain on sale of intercompany assets |  | — |  | — |  | 10.6 |
Charitable contributions |  | — |  | (0.3 | ) | (0.2 | )
Foreign tax rate differential |  | (2.3 | ) | (5.2 | ) | (5.2 | )
Unrecognized tax benefits |  | 0.4 |  | 8.2 |  | 4.1 |
Meals and entertainment |  | 0.2 |  | 0.3 |  | 0.4 |
Tax adjustment for inflation |  | — |  | — |  | (0.3 | )
Domestic manufacturing deduction |  | (0.4 | ) | (1.1 | ) | — |
One-time bad debt and worthless stock deduction |  | — |  | — |  | (33.0 | )
Nondeductible foreign expenses |  | (0.9 | ) | (1.3 | ) | (0.1 | )
Other |  | (1.5 | ) | 0.5 |  | (2.0 | )
Effective income tax rate |  | 28.5 | % | 20.0 | % | 39.5 | %
Pretax earnings of a foreign subsidiary or affiliate are subject to U.S. taxation when effectively repatriated. The Company does not intend to reinvest undistributed earnings indefinitely in the Company’s foreign subsidiaries. Adjustments relating to the U.S. impact of foreign operations increased the effective tax rate by 0.2 percentage points in 2012 and decreased the effective tax rate by 15.1 percentage points in 2011. Included were adjustments for dividends received from foreign subsidiaries, adjustments for foreign tax credits and adjustments relating to the unremitted earnings calculations under applicable U.S. GAAP. Adjustments relating to the U.S. tax impact of foreign operations decreased the effective tax rate by 15.1 percentage points in 2011 and increased the effective tax rate by 13.5 percentage points in 2010. Included were adjustments for dividends received from foreign subsidiaries, adjustments for foreign tax credits and adjustments relating to the unremitted earnings calculations under applicable U.S. GAAP. The components of this calculation were:
Components of U.S. tax impact of foreign operations |  | 2012 |  | 2011 |  | 2010 |
Dividends received from foreign subsidiaries |  | 4.5 | % | 26.2 | % | 25.5 | %
Foreign tax credits |  | (4.0 | ) | (33.1 | ) | (31.7 | )
Unremitted earnings |  | (0.3 | ) | (8.2 | ) | 19.7 |
Total |  | 0.2 | % | (15.1 | )% | 13.5 | %
The significant components of the deferred tax assets (liabilities) are as follows:
As of December 31, |  | 2012 |  | 2011 |
Inventory |  | $ | 1,718 |  | $ | 1,635 |
Accrued liabilities |  | 3,464 |  | 3,269 |
Impaired investments |  | 727 |  | 765 |
Deferred compensation |  | 3,075 |  | 2,514 |
Intangibles assets |  | 2,308 |  | 8,084 |
Bad debts |  | 49 |  | 59 |
Net operating losses |  | 4,152 |  | 4,547 |
Foreign tax and withholding credits |  | 4,406 |  | 5,675 |
Non-income tax accruals |  | 452 |  | 170 |
Health insurance accruals |  | 186 |  | 171 |
Undistributed foreign earnings |  | 2,704 |  | 2,425 |
Other deferred tax assets |  | 2,357 |  | 2,265 |
Valuation allowance |  | (8,149 | ) | (9,836 | )
Total deferred tax assets |  | 17,449 |  | 21,743 |
Other deferred tax liabilities |  | (720 | ) | (868 | )
Total deferred tax liabilities |  | (720 | ) | (868 | )
Total deferred taxes, net |  | $ | 16,729 |  | $ | 20,875 |
The components of deferred tax assets (liabilities), net are as follows:
As of December 31, |  | 2012 |  | 2011 |
Net current deferred tax assets |  | $ | 5,307 |  | $ | 3,945 |
Net non-current deferred tax assets |  | 11,516 |  | 17,026 |
Total net deferred tax assets |  | 16,823 |  | 20,971 |
Net current deferred tax liabilities |  | (1 | ) | (1 | )
Net non-current deferred tax liabilities |  | (93 | ) | (95 | )
Total net deferred tax liabilities |  | (94 | ) | (96 | )
Total deferred taxes, net |  | $ | 16,729 |  | $ | 20,875 |
Net current deferred tax liabilities are included in accrued liabilities and net non-current deferred tax liabilities are included in other liabilities in the consolidated balance sheets. Management has provided a valuation allowance of $8,149 and $9,836 as of December 31, 2012 and 2011, respectively, for certain deferred tax assets, including foreign net operating losses, for which management cannot conclude it is more likely than not that they will be realized. The Company reviewed its tax positions and decreased its valuation allowance by approximately $1,687 in 2012 primarily due to a domestic decrease of $2,079 partially offset by a foreign increase of $392. At December 31, 2012, foreign subsidiaries had unused operating loss carryovers for tax purposes of approximately $4,152. The net operating losses will expire at various dates from 2013 through 2022. For financial reporting purposes, the release of these valuation allowances would reduce income tax expenses. At December 31, 2012, the Company had approximately $4,406 of foreign tax credit, most of which expire in 2020. The Company is subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. The Company believes it has appropriately provided for income taxes for all years. Several factors drive the calculation of its tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law and regulations; (iii) the issuance of tax rulings; and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to the Company’s reserves, which would impact its reported financial results. The Company’s U.S. federal income tax returns for 2009 through 2011 are open to examination for federal tax purposes. The Company has several foreign tax jurisdictions that have open tax years from 2004 through 2011. The Internal Revenue Service (“IRS”) is currently conducting an audit of the Company’s U.S. federal income tax returns for the 2009 and 2010 tax years. The IRS has also indicated that it intends to include 2011 in the aforementioned audit. The Company is currently unable to determine the precise outcome of these matters and their related impact if any, on the Company’s financial condition, results of operations or cash flows. In October 2009, the IRS issued an examination report formally proposing adjustments with respect to the 2003 through 2005 taxable years, which primarily relate to the prices that were charged in intra-group transfers of property and the disallowance of related deductions. The Company challenged the IRS proposals, and took the matter before the Office of Appeals of the Internal Revenue Service. A settlement was reached with IRS Appeals and a proposed settlement agreement was signed by NSP in January 2012. The Company has made all required payments as of June 30, 2012 related to this matter and the examination period for the 2003 through 2005 taxable years closed on December 31, 2012. During 2011, the IRS issued an examination report formally proposing adjustments with respect to the 2006 through 2008 taxable years. As with the previous examination cycle discussed above, the adjustments relate primarily to the prices that were charged in intra-group transfers of property and the disallowance of related deductions. The Company reached a settlement of the issues with the IRS examination team and an agreement was signed by the Company in January 2012. The Company has made all required payments as of December 31, 2012 related to this matter and the examination period for the 2006 through 2007 taxable years closed on September 15, 2012. The examination period for the 2008 taxable year previously closed on March 15, 2012. The total outstanding balance for liabilities related to unrecognized tax benefits at December 31, 2012 and 2011 was $10,571 and $10,426, respectively, all of which would favorably impact the effective tax rate if recognized. Included in these amounts is approximately $1,052 and $1,460, respectively, of interest and penalties. The Company decreased interest and penalties approximately $408 and $321 for the years ended December 31, 2012 and 2011, respectively. The Company accounts for interest expense and penalties for unrecognized tax benefits as part of its income tax provision. During the years ended December 31, 2012, 2011 and 2010, the Company added approximately $3,471, $2,379 and $3,682, respectively, to its liability for unrecognized tax benefits. Included in these amounts are approximately $339, $491 and $1,250 for the years ended December 31, 2012, 2011 and 2010, respectively, related to interest expense and penalties. In addition, the Company recorded a benefit related to the lapse of applicable statute of limitations of approximately $2,815, $1,728 and $3,132 for the years ended December 31, 2012, 2011 and 2010, respectively, all of which favorably impacted the Company’s effective tax rate. A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax benefits, excluding interest and penalties, is as follows for the years:
Year Ended December 31, |  | 2012 |  | 2011 |  | 2010 |
Unrecognized tax benefits, opening balance |  | $ | 8,966 |  | $ | 15,058 |  | $ | 19,687 |
Settlement of liability reclassified as income tax payable |  | — |  | (4,479 | ) | — |
Payments on liability |  | (15 | ) | (2,590 | ) | — |
Tax positions taken in a prior period |  |  |  |  |  |  |
Gross increases |  | 1,120 |  | 541 |  | 2,432 |
Gross decreases |  | (504 | ) | — |  | (980 | )
Tax positions taken in the current period |  |  |  |  |  |  |
Gross increases |  | 2,011 |  | 1,347 |  | — |
Gross decreases |  | — |  | — |  | — |
Lapse of applicable statute of limitations |  | (2,068 | ) | (914 | ) | (1,566 | )
Currency translation adjustments |  | 9 |  | 3 |  | (4,515 | )
Unrecognized tax benefits, ending balance |  | $ | 9,519 |  | $ | 8,966 |  | $ | 15,058 |
Based upon the Company’s negotiations with the IRS in prior audit cycles, it is not likely the Company would seek competent authority related to its current unrecognized tax reserves. The Company anticipates that unrecognized tax benefits will increase approximately $1,000 to $1,500 within the next twelve months due to additional transactions related to commissions and transfer pricing. The Company believes that it is reasonably possible that unrecognized tax benefits will decrease approximately $1,500 to $2,000 within the next twelve months due to the close of audits or the expiration of statutes of limitations in various foreign jurisdictions. Although the Company believes its estimates are reasonable, the Company can make no assurance that the final tax outcome of these matters will not be different from that which it has reflected in its historical income tax provisions and accruals. Such differences could have a material impact on the Company’s income tax provision and operating results in the period in which the Company makes such determination.

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 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 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=6881521&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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: 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 6: 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 7: 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 8: 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