Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes

Income Taxes

Note 18—Income Taxes

The provision for income taxes for the third quarter and the first nine months of 2011 was at an effective rate of 23.5% and 26.3%, respectively.  The 2011 third quarter provision for taxes includes a benefit of approximately $4,700 relating to the $12,800 charge relating to the previously announced flood damage at the Company’s Sidney, New York facility (Note 15) and a one-time tax benefit of $4,500 relating to a reduction in tax expense due primarily to the completion of prior year audits.  The provision for income taxes for the first nine months of 2011 included a one-time tax cost of approximately $6,600 related to a gain of $17,800 for the adjustment of a contingent acquisition related purchase price obligation (Note 16). The provision for income taxes for the third quarter and the first nine months of 2010 was at an effective rate of 22.8% and 23.2%, respectively.  The lower rate in the third quarter and the first nine months of 2010 included $8,400 and $20,700, respectively, of one-time net benefits relating to reductions in international tax expense due primarily to reserve adjustments from favorable settlements of certain tax positions and the completion of prior year audits.

The Company is present in over sixty tax jurisdictions, and at any point in time has numerous audits underway at various stages of completion. With few exceptions, the Company is subject to income tax examinations by tax authorities for the years 2008 and after.  The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until the close of an audit. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by local authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable. As of September 30, 2011, the amount of the liability for unrecognized tax benefits, which if recognized would impact the effective tax rate, was approximately $21,598, the majority of which is included in other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets.  Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including progress of tax audits and the closing of statutes of limitation. Based on information currently available, management anticipates that over the next twelve month period, audit activity could be completed and statutes of limitation may close relating to existing unrecognized tax benefits of approximately $4,000.