XML 26 R22.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes |
13) | Income Taxes
During the second quarter of 2009, based on the negative financial performance of our U.S. operations during the global economic recession, we determined that it was more likely than not the U.S. locations would be unable to generate sufficient profits in the near future to allow realization of existing deferred tax assets. Consequently, during the second quarter of 2009, a valuation reserve was placed on the deferred tax assets related to the U.S. operations in the amount of $5,478 that increased to $7,136 as of December 31, 2009. The determination to place a valuation allowance on the tax benefits incurred by our U.S. based operations was made based upon the fact that second quarter and cumulative 2009 results of these entities were much more unfavorable than originally forecasted. Given the magnitude of the incurred and expected losses from these entities for the remainder of 2009, we determined that it was prudent not to recognize any deferred tax benefits and fully reserve the existing deferred tax assets at June 30, 2009. During the year ended December 31, 2010, we continued to place a valuation allowance on all of the deferred tax assets of our U.S. locations, based on the incurred net loss during the year ended December 31, 2010 at the U.S. Consolidated entities due to the restructuring at the Tempe Plant and the losses from operations at the Wellington Plants. During the year ended December 31, 2011, we continued to place a valuation allowance on all the deferred tax assets at our U.S. locations due to the uncertainty of realization of those deferred tax assets. While our U.S. entities generated pre-tax income of $1,633 during the year ended December 31, 2011, the substantial cumulative losses in 2009 and 2010 outweigh the positive evidence of the 2011 taxable income. If the profitability of the U.S. entities continues and increases it is likely a significant portion if not all of the valuation allowances (except for the valuation allowances on the foreign tax credits) will be removed. This will result in a material credit to income taxes and net income in the period in which the valuation allowances are removed. Income (loss) before provision (benefit) for income taxes for the years ended December 31, 2011, 2010 and 2009 was as follows:
|  | Year ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Income (loss) before provision (benefit) for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 1,633 |  |  | $ | (9,528 | ) |  | $ | (14,671 | )
Foreign |  |  | 24,472 |  |  |  | 20,513 |  |  |  | (22,953 | )
Total |  | $ | 26,105 |  |  | $ | 10,985 |  |  | $ | (37,624 | )
Total income tax expense (benefit) for the years ended December 31, 2011, 2010, and 2009 were as follows:
|  | Year ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | — |  |  | $ | — |  |  | $ | (8 | )
State |  |  | 113 |  |  |  | 183 |  |  |  | 55 |
Non-U.S. |  |  | 6,023 |  |  |  | 3,968 |  |  |  | (3,178 | )
Total current expense (benefit) |  |  | 6,136 |  |  |  | 4,151 |  |  |  | (3,131 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | 534 |  |  |  | (2,732 | ) |  |  | (4,726 | )
State |  |  | 170 |  |  |  | (160 | ) |  |  | (126 | )
U.S. deferred tax valuation allowance |  |  | (704 | ) |  |  | 2,892 |  |  |  | 7,136 |
Non-U.S. |  |  | (968 | ) |  |  | 418 |  |  |  | (1,443 | )
Total deferred expense (benefit) |  |  | (968 | ) |  |  | 418 |  |  |  | 841 |
Total expense (benefit) |  | $ | 5,168 |  |  | $ | 4,569 |  |  | $ | (2,290 | )
A reconciliation of taxes based on the U.S. federal statutory rate of 34% for each of the years ended December 31, 2011, 2010 and 2009 is summarized as follows:
|  | Year ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Income taxes (benefit) at the federal statutory rate |  | $ | 8,876 |  |  | $ | 3,735 |  |  | $ | (12,792 | )
Impact of incentive stock options |  |  | 163 |  |  |  | 52 |  |  |  | 114 |
Increase (decrease) in U.S. valuation allowance |  |  | (704 | ) |  |  | 2,892 |  |  |  | 7,136 |
Increase (decrease) in foreign valuation allowance |  |  | (1,219 | ) |  |  | (937 | ) |  |  | 1,443 |
State income taxes, net of federal taxes |  |  | 75 |  |  |  | 54 |  |  |  | (86 | )
Non-U.S. earnings taxed at different rates |  |  | (2,116 | ) |  |  | (1,650 | ) |  |  | 1,735 |
Other permanent differences, net |  |  | 93 |  |  |  | 423 |  |  |  | 160 |
|  | $ | 5,168 |  |  | $ | 4,569 |  |  | $ | (2,290 | )
Included in the non-U.S. earnings taxed at different rates are the effects of recognizing current and deferred tax benefits totaling $622 related to the Eltmann deconsolidation. These benefits related to losses for write-offs of receivables owed by Eltmann to certain NN subsidiaries that will be deductible once Eltmann is finally liquidated in 2012 or 2013. Additionally, during the year ended December 31, 2011, we began to recognize tax expense at our Kunshan (China) Plant and our Kysucke (Slovakia) Plant as we have fully utilized the previous net operating losses at these foreign jurisdictions. Finally, the decrease in foreign valuation allowance was due to eliminating the valuation allowance on deferred tax assets at our Kysucke (Slovakia) Plant. The tax effects of the temporary differences as of December 31, 2011, 2010 and 2009 are as follows:
|  | Year ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Tax in excess of book depreciation |  | $ | 5,099 |  |  | $ | 5,208 |  |  | $ | 7,401 |
Goodwill |  |  | 1,821 |  |  |  | 2,209 |  |  |  | 1,742 |
Allowance for bad debts |  |  | 18 |  |  |  | 62 |  |  |  | 46 |
Other deferred tax liabilities |  |  | 341 |  |  |  | 387 |  |  |  | 155 |
Gross deferred income tax liabilities |  |  | 7,279 |  |  |  | 7,866 |  |  |  | 9,344 |
Deferred income tax assets: |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 4,846 |  |  |  | 5,754 |  |  |  | 6,686 |
Inventories |  |  | 167 |  |  |  | 84 |  |  |  | 184 |
Pension/Personnel accruals |  |  | 503 |  |  |  | 1,084 |  |  |  | 1,041 |
Deductions for uncollectible Eltmann receivables |  |  | 310 |  |  |  | — |  |  |  | — |
Net operating loss carry forwards |  |  | 7,526 |  |  |  | 10,150 |  |  |  | 9,181 |
Foreign tax credits |  |  | 3,326 |  |  |  | 3,326 |  |  |  | 3,326 |
Other deferred tax assets |  |  | 421 |  |  |  | 356 |  |  |  | 277 |
Gross deferred income tax assets |  |  | 17,099 |  |  |  | 20,754 |  |  |  | 20,695 |
Valuation allowance on deferred tax assets |  |  | (12,568 | ) |  |  | (16,604 | ) |  |  | (14,649 | )
Net deferred income tax assets |  |  | 4,531 |  |  |  | 4,150 |  |  |  | 6,046 |
Net deferred income tax liabilities |  | $ | 2,748 |  |  | $ | 3,716 |  |  | $ | 3,298 |
As realization of deferred tax assets is not assured, management has placed valuation allowances against deferred tax assets it believes are not recoverable. For the remainder, management believes it is more likely than not that those net deferred tax assets will be realized. However, the amount of the deferred tax assets considered realizable could be reduced based on changing conditions. Below is a summary of the activity in the total valuation allowances during the years ended December 31, 2011, 2010 and 2009:
|  | Total Valuation Allowance Activity |
|  | Balance at Beginning of Year |  |  | Additions |  |  | Recoveries |  |  | Deconsolidation of Eltmann subsidiary |  |  | Balance at End of Year |
2011 |  | $ | 16,604 |  |  | $ | — |  |  | $ | (1,923 | ) |  | $ | (2,113 | ) |  | $ | 12,568 |
2010 |  | $ | 14,649 |  |  | $ | 2,892 |  |  | $ | (937 | ) |  |  | — |  |  | $ | 16,604 |
2009 |  | $ | 6,070 |  |  | $ | 8,579 |  |  | $ | — |  |  |  | — |  |  | $ | 14,649 |
The net operating loss carry forwards as of December 31, 2011, are composed of net operating losses at our U.S. operations during 2010, 2009 and 2008. The 2010 and 2009 balances of net operating losses above included $2,035 and $2,499 in 2010 and 2009, respectively, from our former Eltmann Plant which was deconsolidated on January 20, 2011. Full valuation allowances have been recorded against the U.S. companies’ net operating loss carry forwards as of December 31, 2011, 2010 and 2009, as we believe the resulting tax benefits from these loss carry forwards are currently not more likely than not realizable. The losses of the U.S. based entities can be carried forward 20 years. The foreign tax credits relate to profits of certain foreign subsidiaries that were taxed as deemed dividends. These credits represent the foreign taxes paid by these subsidiaries at higher effective rates that will be used to offset future foreign source income. A full valuation allowance was placed against these credits as of December 31, 2008, based on estimates of future levels of U.S. income tax and foreign source income to be generated that these credits can be used to offset. The valuation allowance will be periodically reviewed as our estimates of future foreign source income are revised based on actual foreign source income recognized in our tax returns and future changes in foreign source income. As of December 31, 2011, management believes it is still not likely that we would utilize these credits in the near future. As of December 31, 2006, all of the Company’s foreign earnings have been previously taxed in the U.S. due to the application of IRC Sec. 956. Accordingly, no deferred taxes have been provided for undistributed earnings up to that time. For the remainder of the foreign earnings, we expect to reinvest future earnings indefinitely in operations and expansions outside the U.S. and do not expect such earnings to become subject to U.S. taxation in the foreseeable future. If such earnings were distributed beyond the amount for which taxes have been provided, foreign tax credits would substantially offset any incremental U.S. tax liability. A deferred tax liability will be recognized when we expect we will recover these undistributed earnings in a taxable manner, such as through the receipt of dividends or sale of the investments. As we plan to permanently reinvest foreign undistributed earnings, we have not provided for U.S. income tax liability that would be payable if such earnings were not reinvested indefinitely. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties for the years ended December 31, 2011, 2010 and 2009 is as follows:
|  | 2011 |  |  | 2010 |  |  | 2009 |
Beginning balance |  | $ | 953 |  |  | $ | 988 |  |  | $ | 988 |
Additions for tax positions of prior years |  |  | 35 |  |  |  | — |  |  |  | — |
Reductions for tax positions of prior years |  |  | — |  |  |  | (35 | ) |  |  | — |
Ending balance |  | $ | 988 |  |  | $ | 953 |  |  | $ | 988 |
As of December 31, 2011, the $988 of unrecognized tax benefits would, if recognized, impact the Company’s effective tax rate. Interest and penalties related to federal, state, and foreign income tax matters are recorded as a component of the provision for income taxes in our statements of operations. During 2009, we accrued an additional $40 in foreign interest and penalties resulting in an accrued balance of $740 of interest and penalties as of December 31, 2009. During 2010, we accrued $30 in foreign interest and penalties and removed $15 in interest and penalties for closed tax years as the previous uncertain tax accruals are no longer required. During 2011, we had a net reduction in foreign interest and penalties of $43 as older uncertain items were eliminated and newer uncertain items added. As of December 31, 2011, the total amount accrued for interest and penalties was $712. The Company or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and in various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for years before 2006. The Company is no longer subject to non-U.S. income tax examinations within various European Union countries for years before 2007. We do not foresee any significant changes to our unrecognized tax benefits within the next twelve months.

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 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration