Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

6. Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Undistributed earnings of the Company’s foreign subsidiaries are considered to be indefinitely reinvested. As such, no U.S. federal and state income taxes have been provided thereon, and it is not practicable to determine the amount of the related unrecognized deferred income tax liability. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	2011			2010
	(In thousands)
Deferred tax assets related to:
Expenses not yet deducted for tax purposes	$	200,698		$	163,367
Pension liability not yet deducted for tax purposes		377,846			279,204
Capital loss		16,803			24,580
Valuation allowance		(16,803	)		(24,784	)
		578,544			442,367
Deferred tax liabilities related to:
Employee and retiree benefits		188,206			178,806
Inventory		66,044			72,767
Property, plant, and equipment		47,413			33,474
Other		43,225			17,728
		344,888			302,775
Net deferred tax asset		233,656			139,592
Current portion of deferred tax liability		17,250			17,800
Noncurrent net deferred tax asset	$	250,906		$	157,392

The current portion of the deferred tax liability is included in income taxes payable in the consolidated balance sheets. The Company has a capital loss carryforward of approximately $42,000,000 that will expire in 2013.

The components of income tax expense are as follows:

	2011			2010		2009
	(In thousands)
Current:
Federal	$	260,222		$	221,770	$	171,691
State		41,511			36,291		28,591
Foreign		26,294			16,217		16,409
Deferred		(2,337	)		11,994		27,899
	$	325,690		$	286,272	$	244,590

The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:

	2011			2010			2009
	(In thousands)
Statutory rate applied to income	$	311,782		$	266,624		$	225,458
Plus state income taxes, net of Federal tax benefit		26,790			24,621			20,977
Other		(12,882	)		(4,973	)		(1,845	)
	$	325,690		$	286,272		$	244,590

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2008 or subject to non-United States income tax examinations for years ended prior to 2002. The Company is currently under audit in the United States and Canada. Some audits may conclude in the next 12 months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next twelve months to previously recorded uncertain tax positions in connection with the audits. However, the Company does not anticipate total unrecognized tax benefits will significantly change during the year due to the settlement of audits and the expiration of statutes of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2011			2010			2009
	(In thousands)
Balance at beginning of year	$	39,425		$	33,322		$	30,453
Additions based on tax positions related to the current year		6,035			4,243			5,648
Additions for tax positions of prior years		7,966			3,493			993
Reductions for tax positions for prior years		(481	)		(624	)		—
Reduction for lapse in statute of limitations		(4,563	)		(451	)		(2,779	)
Settlements		(1,537	)		(558	)		(993	)
Balance at end of year	$	46,845		$	39,425		$	33,322

The amount of gross tax effected unrecognized tax benefits, including interest and penalties, as of December 31, 2011 and 2010 was approximately $59,532,000 and $50,216,000, respectively, of which approximately $18,966,000 and $18,189,000, respectively, if recognized, would affect the effective tax rate. During the years ended December 31, 2011, 2010, and 2009, the Company paid interest and penalties of approximately $759,000, $272,000, and $363,000, respectively. The Company had approximately $12,687,000 and $10,791,000 of accrued interest and penalties at December 31, 2011 and 2010, respectively. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.