Provision For Income Taxes

12 Months Ended

Dec. 31, 2011

Provision For Income Taxes [Abstract]

Provision For Income Taxes

12. Provision for Income Taxes

The components of the provision for income taxes were as follows:

	Year Ended December 31
(Dollars in thousands)	2011			2010		2009
Current
Federal	$	3,338		$	4,880	$	6,005
State and local		462			942		943
Foreign		12			2,515		2,436
		3,812			8,337		9,384
Deferred
Federal		13,018	(1)		4,160		1,897
State and local		597			346		343
Foreign		(261	)		317		130
		13,354			4,823		2,370
Provision for income taxes	$	17,166		$	13,160	$	11,754

(1) $5.5 million relates to the reversal of indirect benefits on uncertain tax benefits which lapsed due to the statute of limitations.

Income before income tax provision and equity in income of equity investments includes income generated by operations outside the United States of $11.8 million, $12.7 million, and $10.7 million for 2011, 2010, and 2009, respectively.

The differences between the U.S. federal statutory tax rate and the Company's effective income tax rate is as follows:

	Year Ended December 31
	2011			2010			2009
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		2.1			2.1			2.3
Deferred tax related to equity investment		—			—			(1.5	)
Tax rate differential on foreign income		(1.0	)		(0.6	)		(0.8	)
Valuation allowance release		—			(7.3	)		(9.7	)
Tax statute expiration		(5.8	)		(1.7	)		(0.5	)
Change in uncertain tax positions		0.6			1.4			0.2
Other – net		(0.5	)		(1.4	)		(1.3	)
Effective income tax rate		30.4	%		27.5	%		23.7	%

The Company has the following gross operating loss carryforwards and domestic tax credit carryforwards as of December 31, 2011:

	Amount
Type	(Thousands)		Expiration Date
Foreign tax credits	$	3,317		2016 – 2017
State tax credits		1,355		2027
Operating loss carryforwards – federal		1,011		2029
Operating loss carryforwards – state(1)		31,312		2015 – 2030
Operating loss carryforwards – foreign		187		2015 – None

(1) Of the total state operating loss-carryforwards, approximately 84% expire in 2020 or later.

The components of deferred taxes consist of the following:

	December 31
(Dollars in thousands)	2011		2010
Deferred tax assets(1)
Net operating loss and credit carryforwards(2)	$	6,159	$	12,910
Accruals		10,380		11,951
Inventories		11,431		9,713
Pensions		11,303		7,720
Total deferred tax assets		39,273		42,294
Deferred tax liabilities
Property, plant and equipment	$	24,551	$	22,149
Goodwill and other intangible assets		6,454		4,719
U.S. liability on Belgian and German net deferred tax assets		1,292		479
Total deferred tax liabilities		32,297		27,347
Net deferred tax asset(3)	$	6,976	$	14,947

(1) Uncertain tax liabilities of approximately $0.3 million and zero partially offset the net operating losses and credit carryforwards in 2011 and 2010, respectively.

(2) Net indirect benefits on uncertain tax liabilities of approximately $1.1 million and $6.5 million are included in the U.S. net operating loss and credit carryforwards in 2011 and 2010, respectively.

(3) A current deferred tax liability of $0.2 million and $0.1 million are included in accounts payable and accrued liabilities within the 2011 and 2010 consolidated balance sheets, respectively.

The Company has classified uncertain tax positions as non-current income tax liabilities unless the amount is expected to be paid within one year. The following is a reconciliation of the unrecognized income tax benefits:

(Dollars in thousands)	2011			2010			2009
Balance at January 1	$	11,215		$	11,704		$	12,249
Gross increases for tax positions of prior years		252			878			266
Gross decreases for tax positions of prior years		(84	)		(301	)		(1,014	)
Gross increases for tax positions of current year		562			219			803
Lapse of statute of limitations		(7,867	)		(1,285	)		(141	)
Settlements		—			—			(459	)
Balance at December 31	$	4,078		$	11,215		$	11,704

As of December 31, 2011, approximately $2.9 million of the $4.1 million, and as of December 31, 2010, approximately $4.9 million of the $11.2 million, of unrecognized tax benefits would reduce the Company's effective tax rate if recognized. Total uncertain tax positions recorded in accrued pension and other liabilities were approximately $4.6 million and $12.6 million for the year ended December 31, 2011 and 2010, respectively.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During 2011, the Company reversed approximately $0.7 million primarily due to the lapse of the statute of limitations and in 2010, recognized approximately $0.4 million of interest and penalties. As of December 31, 2011 and 2010, the amount accrued for the payment of interest and penalties is approximately $0.8 million and $1.5 million, respectively.

At this time, the Company believes that it is reasonably possible that approximately $2.1 million of the estimated unrecognized tax benefits as of December 31, 2011, related primarily to foreign income items, will be recognized within the next twelve months based on the expiration of statutory review periods of which $1.2 million will impact the effective tax rate.

As of December 31, 2011, the following tax years remain subject to examination for the major jurisdictions where the Company conducts business:

Jurisdiction	Years
United States		2005, 2008 – 2011
Kentucky		2007 – 2011
Pennsylvania		2008 – 2011
Belgium		2009 – 2011
Canada		2007 – 2011
Germany		2008 – 2011
UK		2008 – 2011
Japan		2006 – 2011