Income Taxes (Notes)

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax [Text Block]

Income Taxes

The Company's effective tax rate for the three and six months ended June 30, 2013 was lower than the federal statutory rate of 35% and the effective tax rate for the same periods in 2012 primarily due to the following discrete items (in millions):

	Three Months Ended June 30, 2013		Six Months Ended June 30, 2013
Section 199 deduction	$	20.3	$	20.3
Tax settlement with Internal Revenue Service (“IRS”)	$	—	$	27.8
Reinstatement of the U.S. federal research and development (“R&D”) tax credit	$	—	$	15.2

During the three and six months ended June 30, 2013, the Company completed a multi-year study for a Section 199 deduction for U.S. production activities. Section 199 provides for a special deduction for taxpayers engaged in qualified production activities within the United States. During the six months ended June 30, 2013, the Company finalized a closing agreement with the IRS covering specific matters related to the audit of the Company's federal income tax returns for tax years 2004 through 2006. In addition, on January 2, 2013, the American Taxpayer Relief Act of 2012 retroactively reinstated the U.S. federal R&D tax credit from January 1, 2012 to December 31, 2013.

The effective tax rates for the three and six months ended June 30, 2012, are similar to the federal statutory rate of 35%. The rates reflect the benefit of earnings in foreign jurisdictions, which are subject to lower tax rates, offset by the impact of the Company's investment activity. The effective rates for the periods do not reflect the benefit of the federal R&D credit, which expired on December 31, 2011.

As of June 30, 2013, the total amount of gross unrecognized tax benefits was $142.6 million, of which $126.6 million, if recognized, would affect the effective tax rate. The increase in the gross unrecognized tax benefits for the six months ended June 30, 2013 of approximately $6.5 million is primarily due to the multi-year claim related to the U.S. production activities deduction partially offset by the IRS tax settlement referenced above.

The Company engages in continuous discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. There is a greater than remote likelihood that the balance of the gross unrecognized tax benefits will decrease by approximately $3.6 million within the next twelve months due to lapses of applicable statutes of limitation and the completion of tax review cycles in various tax jurisdictions.

The Company is currently under examination by the IRS for the 2007 through 2009 tax years. The Company is also subject to separate ongoing examinations by the India tax authorities for the 2004 tax year, 2004 through 2008 tax years and the 2009 through 2010 tax years. The Company is not aware of any other examinations by tax authorities in any other major jurisdictions in which it files income tax returns as of June 30, 2013.

In 2008, the Company received a proposed adjustment from the India tax authorities related to the 2004 tax year. In 2009, the India tax authorities commenced a separate investigation of our 2004 through 2008 tax returns and are disputing the Company's determination of taxable income due to the cost basis of certain fixed assets. The Company accrued $4.6 million in penalties and interest in 2009 related to this matter. The Company understands that in accordance with the administrative and judicial process in India, the Company may be required to make payments that are substantially higher than the amount accrued in order to ultimately settle this issue. The Company strongly believes that any assessment it may receive in excess of the amount accrued would be inconsistent with applicable India tax laws and intends to defend this position vigorously.

The Company is pursuing all available administrative remedies relative to these matters. The Company believes that it has adequately provided for any reasonably foreseeable outcomes related to these proposed adjustments and the ultimate resolution of these matters is unlikely to have a material effect on its consolidated financial condition or results of operations; however there is still a possibility that an adverse outcome of these matters could have a material effect on its consolidated financial condition and results of operations. For more information, see Note 16, Commitments and Contingencies, under the heading “IRS Notices of Proposed Adjustments.”