INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Components of Earnings Before Taxes

The components of earnings before income taxes consist of the following (in millions):

For the Years Ended December 31,	2012		2011		2010
United States operations	$	409.9	$	485.7	$	382.4
Foreign operations		580.2		493.2		477.8
Total	$	990.1	$	978.9	$	860.2

The provision for income taxes consists of (in millions):

Current:
Federal	$	179.8		$	148.4		$	235.3
State		13.8			14.3			19.5
Foreign		108.4			75.9			81.0
		302.0			238.6			335.8
Deferred:
Federal		(58.8	)		(2.6	)		(54.9	)
State		0.7			(0.9	)		(2.0	)
Foreign		(6.7	)		(16.2	)		(15.6	)
		(64.8	)		(19.7	)		(72.5	)
Provision for income taxes	$	237.2		$	218.9		$	263.3

Reconciliation of U.S. Statutory Income Tax Rate to our Effective Tax Rate

A reconciliation of the U.S. statutory income tax rate to our effective tax rate is as follows:

For the Years Ended December 31,	2012			2011			2010
U.S. statutory income tax rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal deduction		1.0			0.7			1.3
Tax impact of foreign operations, including foreign tax credits		(10.4	)		(11.0	)		(10.6	)
Tax impact of significant non-recurring transactions		(3.5	)		–			–
Tax benefit relating to U.S. manufacturer’s deduction and export sales		(1.9	)		(1.6	)		(2.6	)
R&D credit		–			(0.5	)		(0.8	)
Goodwill impairment		3.4			–			8.3
Other		0.4			(0.2	)		–
Effective income tax rate		24.0	%		22.4	%		30.6	%

Components of Deferred Taxes

The components of deferred taxes consisted of the following (in millions):

As of December, 31	2012			2011
Deferred tax assets:
Inventory	$	225.1		$	218.5
Net operating loss carryover		26.8			23.5
Tax credit carryover		16.4			16.9
Capital loss carryover		4.0			4.0
Accrued liabilities		67.0			116.1
Share-based compensation		106.3			98.3
Unremitted earnings of foreign subsidiaries		172.3			103.9
Other		42.3			73.1
Total deferred tax assets		660.2			654.3
Less: Valuation allowances		(41.3	)		(40.3	)
Total deferred tax assets after valuation		618.9			614.0
Deferred tax liabilities:
Fixed assets	$	(93.9	)	$	(111.6	)
Intangible assets		(140.6	)		(148.9	)
Accrued liabilities		–			(1.0	)
Other		(1.0	)		–
Total deferred tax liabilities		(235.5	)		(261.5	)
Total net deferred tax assets	$	383.4		$	352.5

Tabular Reconciliation of Total Amounts of Unrecognized Tax Benefits

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in millions):

For the Years Ended December 31,	2012			2011			2010
Balance at January 1	$	158.4		$	168.0		$	150.4
Increases related to prior periods		118.7			11.4			23.1
Decreases related to prior periods		(8.9	)		(49.0	)		(6.1	)
Increases related to current period		19.1			34.4			23.7
Decreases related to settlements with taxing authorities		(0.6	)		(4.8	)		(14.1	)
Decreases related to lapse of statute of limitations		(1.2	)		(1.6	)		(9.0	)
Balance at December 31	$	285.5		$	158.4		$	168.0
Amounts impacting effective tax rate, if recognized balance at December 31	$	159.0		$	132.7		$	112.2