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Income Taxes
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
12. Income Taxes

Income taxes have been based on the following components of “Earnings before provision for income taxes and discontinued operations” in the Consolidated Statements of Earnings: 
 
Years Ended December 31,
 
2014

2013

2012
Domestic
$
789,689

 
$
714,723

 
$
640,896

Foreign
304,518

 
331,263

 
290,169

 
$
1,094,207

 
$
1,045,986

 
$
931,065



Income tax expense (benefit) relating to continuing operations for the years ended December 31, 2014, 2013, and 2012 is comprised of the following:
 
Years Ended December 31,
 
2014
 
2013
 
2012
Current:
 
 
 
 
 
U.S. Federal
$
231,939

 
$
114,218

 
$
196,622

State and local
8,434

 
17,468

 
(1,590
)
Foreign
97,037

 
89,702

 
84,723

Total current
337,410

 
221,388

 
279,755

Deferred:
 
 
 
 
 
U.S. Federal
$
7,386

 
$
35,315

 
$
20,149

State and local
11,250

 
(4,556
)
 
(2,262
)
Foreign
(39,979
)
 
(3,688
)
 
(16,652
)
Total deferred
(21,343
)
 
27,071

 
1,235

Total expense
$
316,067

 
$
248,459

 
$
280,990



Differences between the effective income tax rate and the U.S. federal income statutory rate are as follows:
 
Years Ended December 31,
 
2014
 
2013
 
2012
U.S. Federal income tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
State and local taxes, net of Federal income tax benefit
1.3

 
1.2

 
1.3

Foreign operations tax effect
(3.7
)
 
(3.3
)
 
(3.2
)
R&E tax credits (1)
(0.3
)
 
(0.7
)
 
—

Domestic manufacturing deduction
(3.0
)
 
(2.2
)
 
(2.2
)
Foreign tax credits
0.4

 
0.3

 
0.3

Branch losses
(0.7
)
 
(0.2
)
 
—

Release of valuation allowance
(0.6
)
 
—

 
—

Resolution of tax contingencies
(0.5
)
 
(7.2
)
 
(1.8
)
Other, principally non-tax deductible items
1.0

 
0.9

 
0.8

Effective rate from continuing operations
28.9
 %
 
23.8
 %
 
30.2
 %
(1)
On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, and this legislation retroactively extended the R&E tax credit for two years, from January 1, 2012 through December 31, 2013. Income tax expense for 2013 includes $4.8 million for the entire benefit of the R&E tax credit attributable to 2012.

The tax effects of temporary differences that give rise to future deferred tax assets and liabilities are as follows:
 
December 31, 2014
 
December 31, 2013
Deferred Tax Assets:
 
 
 
Accrued compensation, principally postretirement and other employee benefits
$
151,640

 
$
130,326

Accrued expenses, principally for state income taxes, interest, and warranty
45,262

 
43,700

Net operating loss and other carryforwards
190,298

 
70,821

Inventories, principally due to reserves for financial reporting purposes and capitalization for tax purposes
13,285

 
14,068

Accounts receivable, principally due to allowance for doubtful accounts
4,323

 
4,507

Accrued insurance
5,529

 
4,353

Long-term liabilities, principally warranty, environmental, and exit costs
4,096

 
3,777

Other assets
(8,838
)
 
(11,957
)
Total gross deferred tax assets
405,595

 
259,595

Valuation allowance
(141,252
)
 
(14,063
)
Total deferred tax assets
$
264,343

 
$
245,532

 
 
 
 
Deferred Tax Liabilities:
 
 
 
Intangible assets, principally due to different tax and financial reporting bases and amortization lives
$
(694,602
)
 
$
(604,464
)
Plant and equipment, principally due to differences in depreciation
(55,012
)
 
(61,455
)
Accounts receivable
(6,481
)
 
(6,674
)
Total gross deferred tax liabilities
(756,095
)
 
(672,593
)
Net deferred tax liability
$
(491,752
)
 
$
(427,061
)
 
 
 
 
Classified as follows in the consolidated balance sheets:
 
 
 
Current deferred tax asset
$
63,276

 
$
60,101

Non-current deferred tax asset
10,107

 
5,642

Current deferred tax liability
(928
)
 
(953
)
Non-current deferred tax liability
(564,207
)
 
(491,851
)
 
$
(491,752
)
 
$
(427,061
)


As of December 31, 2014, the Company has loss carryforwards for U.S. Federal purposes totaling approximately $71.5 million attributed to the 2011 Anthony acquisition, and loss carryforwards for non-U.S. purposes totaling $519.4 million primarily resulting from restructuring undertaken to effect the Knowles spin-off. As of December 31, 2013, the Company had non-U.S loss carryforwards of $39.9 million.  The federal loss carryforwards are available for use against the Company's consolidated federal taxable income and begin to expire in 2024. The entire balance of the non-U.S. losses as of December 31, 2014 is available to be carried forward, with $20.3 million of these losses beginning to expire during the years 2015 through 2034. The remaining $499.1 million of such losses can be carried forward indefinitely.

The Company has $109.2 million and $145.8 million of state tax loss carryforwards as of December 31, 2014 and 2013, respectively, that are available for use by the Company between 2015 and 2034.
 
As of December 31, 2014 and 2013, the Company has research and development credit carryforwards for U.S. Federal purposes of $0.8 million attributable to the 2011 Anthony acquisition and no alternative minimum tax credits. The research and development credits begin to expire in 2025.
 
The Company maintains valuation allowances by jurisdiction against the deferred tax assets related to certain of these carryforwards as utilization of these tax benefits is not assured for certain jurisdictions.
 
The Company has not provided for U.S. federal income taxes or tax benefits on the undistributed earnings of its international subsidiaries, totaling approximately $1.3 billion at December 31, 2014, because such earnings are reinvested and it is currently intended that they will continue to be reinvested indefinitely. It is not practicable to estimate the amount of tax that might be payable if some or all of such earnings were to be repatriated, and the amount of foreign tax credits that would be available to reduce or eliminate the resulting U.S. income tax liability.

Unrecognized Tax Benefits

The Company files U.S., state, local, and foreign tax returns. The Company is routinely audited by the tax authorities in these jurisdictions, and a number of audits are currently underway. It is reasonably possible during the next twelve months that uncertain tax positions may be settled, which could result in a decrease in the gross amount of unrecognized tax benefits. This decrease may result in an income tax benefit. Due to the potential for resolution of federal, state, and foreign examinations, and the expiration of various statutes of limitation, the Company's gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $27 million. Some portion of any such change may be reported as discontinued operations. The Company is no longer subject to examinations of its federal income tax returns for years through 2010. All significant state, local, and international matters have been concluded for years through 2007. The Company believes adequate provision has been made for all income tax uncertainties.

The following table is a reconciliation of the beginning and ending balances of the Company’s unrecognized tax benefits:
 
Continuing
 
Discontinued
 
Total
Unrecognized tax benefits at January 1, 2012
$
134,773

 
$
54,268

 
$
189,041

Additions based on tax positions related to the current year
10,188

 
26

 
10,214

Additions for tax positions of prior years
4,128

 
3,470

 
7,598

Reductions for tax positions of prior years
(14,257
)
 
(25
)
 
(14,282
)
Settlements
(418
)
 
(85
)
 
(503
)
Lapse of statutes
(12,550
)
 
(3,429
)
 
(15,979
)
Unrecognized tax benefits at December 31, 2012
121,864

 
54,225

 
176,089

Additions based on tax positions related to the current year
9,056

 
1

 
9,057

Additions for tax positions of prior years
7,584

 
3,315

 
10,899

Reductions for tax positions of prior years (A)
(62,610
)
 
(40,240
)
 
(102,850
)
Settlements
(2,823
)
 
(2,523
)
 
(5,346
)
Lapse of statutes
(7,845
)
 
(1,564
)
 
(9,409
)
Unrecognized tax benefits at December 31, 2013
65,226

 
13,214

 
78,440

Additions based on tax positions related to the current year
11,751

 
14

 
11,765

Additions for tax positions of prior years
1,065

 
499

 
1,564

Reductions for tax positions of prior years
(5,782
)
 
(265
)
 
(6,047
)
Settlements
(843
)
 
(155
)
 
(998
)
Lapse of statutes
(5,050
)
 
(2,585
)
 
(7,635
)
Unrecognized tax benefits at December 31, 2014
$
66,367

(B) 
$
10,722

 
$
77,089


(A)
The settlement of certain income tax examinations of the 2009 and 2010 tax years resulted in a significant decrease in gross unrecognized tax benefits.

(B)
If recognized, the net amount of potential tax benefits that would impact the Company’s effective tax rate is $48.8 million. During the years ended December 31, 2014, 2013, and 2012, the Company recorded potential interest and penalty expense (income) of $(1.3) million, $(5.5) million and $0.1 million, respectively, related to its unrecognized tax benefits as a component of provision for income taxes. The Company had accrued interest and penalties of $15.5 million at December 31, 2014 and $17.1 million at December 31, 2013, which are not included in the above table.