Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

11.    Income Taxes:

Our income tax provision (benefit) from continuing operations consisted of the following (in millions):

	For the Years Ended December 31,
	2011			2010			2009
Current:
Federal	$	27.7		$	54.7		$	17.5
State		2.8			6.0			5.0
Foreign		8.8			7.3			8.1
Total current		39.3			68.0			30.6
Deferred:
Federal		0.9			(6.9	)		9.9
State		(0.5	)		(1.6	)		3.0
Foreign		2.6			—			(4.4	)
Total deferred		3.0			(8.5	)		8.5
Total income tax provision	$	42.3		$	59.5		$	39.1

Income from continuing operations before income taxes was comprised of the following (in millions):

	For the Years Ended December 31,
	2011		2010		2009
Domestic	$	91.3	$	157.2	$	99.7
Foreign		39.3		19.4		1.2
Total	$	130.6	$	176.6	$	100.9

The difference between the income tax provision from continuing operations computed at the statutory federal income tax rate and the financial statement provision for taxes is summarized as follows (in millions):

	For the Years Ended December 31,
	2011			2010			2009
Provision at the U.S. statutory rate of 35%	$	45.7		$	61.8		$	35.3
Increase (reduction) in tax expense resulting from:
State income tax, net of federal income tax benefit		1.6			2.5			3.8
Other permanent items		(3.3	)		(2.3	)		(2.8	)
Research tax credit		(0.3	)		(0.5	)		(0.6	)
Decrease in tax audit reserves		(0.6	)		(0.2	)		(1.6	)
Change in valuation allowance		(0.5	)		(1.8	)		4.5
Foreign taxes at rates other than 35% and miscellaneous other		(0.3	)		—			0.5
Total income tax provision	$	42.3		$	59.5		$	39.1

Deferred income taxes reflect the tax consequences on future years of temporary differences between the tax basis of assets and liabilities and their financial reporting basis and are reflected as current or non-current depending on the classification of the asset or liability generating the deferred tax. The deferred tax provision for the periods shown represents the effect of changes in the amounts of temporary differences during those periods.

Deferred tax assets (liabilities) were comprised of the following (in millions):

	For the Years  Ended December 31,
	2011			2010
Gross deferred tax assets:
Warranties	$	27.5		$	32.0
Net operating losses (foreign and U.S. state)		28.4			42.2
Postretirement and pension benefits		55.3			42.6
Inventory reserves		6.4			4.1
Receivables allowance		6.0			6.4
Compensation liabilities		18.1			17.3
Deferred income		7.4			7.8
Insurance liabilities		18.7			15.4
Other		12.9			10.6
Total deferred tax assets		180.7			178.4
Valuation allowance		(12.8	)		(24.3	)
Total deferred tax assets, net of valuation allowance		167.9			154.1

	For the Years  Ended December 31,
	2011			2010
Gross deferred tax liabilities:
Depreciation		(12.3	)		(11.1	)
Intangibles		(9.2	)		(6.6	)
Other		(2.6	)		(12.5	)
Total deferred tax liabilities		(24.1	)		(30.2	)
Net deferred tax assets	$	143.8		$	123.9

As of December 31, 2011 and 2010, we had $6.1 million and $6.5 million in tax effected state net operating loss carryforwards, respectively, and $22.2 million and $35.8 million in tax effected foreign net operating loss carryforwards, respectively. The state and foreign net operating loss carryforwards begin expiring in 2014. The deferred tax asset valuation allowance relates primarily to the operating loss carryforwards in various states in the U.S., European and Asian tax jurisdictions. The decrease in tax effected net operating loss carryforwards and associated valuation allowance is primarily related to the write-off of foreign losses, which were not previously benefited. The remaining decrease in the valuation allowance is primarily the result of foreign and state losses which were not previously benefited and currency fluctuation.

In assessing whether a deferred tax asset will be realized, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We consider the reversal of existing taxable temporary differences, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not that we will realize the benefits of these deductible differences, net of the existing valuation allowances, as of December 31, 2011.

In order to realize the net deferred tax asset, we will need to generate future foreign taxable income of approximately $86.6 million during the periods in which those temporary differences become deductible. We also will need to generate U.S. federal income of approximately $80.8 million in addition to our carryback capacity to fully realize the federal deferred tax asset. U.S. taxable income for the years ended December 31, 2011 and 2010 was $55.2 million and $156.5 million, respectively.

No provision was made for income taxes which may become payable upon distribution of our foreign subsidiaries’ earnings. It is not practicable to estimate the amount of tax that might be payable because our intent is to permanently reinvest these earnings or to repatriate earnings when it is tax effective to do so.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

Balance as of December 31, 2009	$	1.5
Decreases related to prior year tax positions		(0.4	)
Settlements		(0.1	)
Balance as of December 31, 2010	$	1.0
Decreases related to prior year tax positions		(0.7	)
Increases related to current year tax positions		5.7
Settlements		(0.1	)
Balance as of December 31, 2011	$	5.9

Included in the balance of unrecognized tax benefits as of December 31, 2011 are potential benefits of $5.9 million that, if recognized, would affect the effective tax rate on income from continuing operations. As of December 31, 2011, we recognized $0.1 million (net of federal tax benefits) in interest and penalties in income tax expense.

The U.S. Internal Revenue Service (“IRS”) completed its examination of our consolidated tax returns for the years ended 2008 — 2009 and we reached a settlement with the IRS on April 7, 2011, which resulted in an immaterial impact to the Consolidated Statements of Operations.

We are currently under examination for our U.S. federal income taxes for 2010 and 2011 and are subject to examination by numerous other taxing authorities in the U.S. and in jurisdictions such as Australia, Belgium, France, Canada, and Germany. We are generally no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by taxing authorities for years before 2005.

Since January 1, 2011, numerous states including Arizona, Illinois, New Jersey, Indiana and Michigan have enacted legislation effective for tax years beginning on or after January 1, 2011, including changes to rates, apportionment methods and overall taxation systems. We determined the impact of these changes to be immaterial.