Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Earnings from continuing operations before income taxes

Earnings from continuing operations before income taxesfor 2012, 2011 and 2010 consisted of the following:

(Thousands of dollars)	2012		2011		2010
United States	$	88,301	$	76,025	$	50,278
Foreign		37,654		29,444		17,167
Total earnings before income taxes	$	125,955	$	105,469	$	67,445

Components of income tax provision

The income tax provision for 2012, 2011 and 2010 consisted of the following:

(Thousands of dollars)	2012			2011			2010
Current:
U.S. federal and state income taxes	$	35,054		$	21,466		$	15,815
Foreign		12,324			8,465			6,663
Total current		47,378			29,931			22,478
Deferred:
U.S. federal and state income taxes		1,885			9,820			2,819
Foreign		(5,165	)		(254	)		(1,383	)
Total deferred		(3,280	)		9,566			1,436
Total	$	44,098		$	39,498		$	23,914

Reconciliation of income tax provision from statutory to GAAP

A reconciliation of the income tax provision as computed at the statutory U.S. income tax rate and the income tax provision presented in the consolidated financial statements is as follows:

(Thousands of dollars)	2012			2011			2010
Tax provision computed at statutory rate	$	44,084		$	36,914		$	23,606
Tax effect of:
Expenses for which no benefit was realized		492			702			202
Change in effective state tax rate		23			(6	)		13
Tax credit		(239	)		(733	)		(930	)
State taxes net of federal benefit		2,512			1,779			1,813
Benefit of manufacturing deduction		(3,093	)		(1,492	)		(1,127	)
Acquisition costs		2,437			1,919			-
Foreign operations		(1,217	)		520			530
Other, net		(901	)		(105	)		(193	)
Total provision for taxes	$	44,098		$	39,498		$	23,914

Primary components of deferred tax assets and liabilities and related valuation allowances

The primary components of the deferred tax assets and liabilities and the related valuation allowances are as follows:

(Thousands of dollars)	2012			2011
Deferred income tax assets:
Pension costs	$	43,788		$	36,430
Payroll and benefits		1,129			1,365
Accrued warranty expenses		1,906			1,425
Postretirement benefits		9,137			8,143
Accrued liabilities		261			591
Other, net		8,573			1,680
Total deferred income tax assets		64,794			49,634
Less valuation allowance		(4,779	)		(1,117	)
Total deferred income tax assets		60,015			48,517
Noncurrent deferred income tax liabilities:
Prepaid expenses		(792	)		(993	)
Depreciation		(33,781	)		(34,143	)
Inventories		(974	)		(1,758	)
Intangible assets		(17,527	)		(8,784	)
Liability for unremitted earnings		(12,005	)
Other, net		(210	)		(5,585	)
Total noncurrent deferred income tax liabilities, net		(65,289	)		(51,263	)
Total net deferred tax liability	$	(5,274	)	$	(2,746	)
Current deferred tax asset	$	574		$	1,140
Non-current deferred tax liability		(5,848	)		(3,886	)
Total net deferred tax liability	$	(5,274	)	$	(2,746	)

Reconciliation of unrecognized tax benefits

At December 31, 2012, 2011 and 2010 there are $5.6 million, $2.1 million and $1.8 million, respectively, of unrecognized tax benefits. Of these amounts, $3.0 million, $2.1 million, and $1.8 million, respectively, represent the amounts of unrecognized tax benefits that, if recognized, would favorably affect the net effective income tax rate in any future period. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(Thousands of dollars)	2012			2011			2010
Balance at January 1,	$	2,060		$	1,838		$	1,509
Gross increases- current year tax positions		4,255			791			372
Gross increases- tax positions from prior periods		3			115			233
Gross decreases- tax positions from prior periods		(683	)		(657	)		(262	)
Settlements		-			(27	)		(14	)
Balance at December 31,	$	5,635		$	2,060		$	1,838