Note 5. Income Taxes

Income from operations before provision for taxes by domestic and foreign source is as follows:

Millions of Dollars		2013		2012		2011
Domestic	$	66.6	$	56.9	$	47.0
Foreign		57.1		53.7		54.5
Income from operations before provision for income taxes	$	123.7	$	110.6	$	101.5

The provision (benefit) for taxes on income consists of the following:

Millions of Dollars				2013		2012			2011

Domestic
Taxes currently payable
	Federal		$	13.7	$	14.9		$	11.8
	State and local			2.6		1.3			2.2
Deferred income taxes				2.5		3.2			(1.9	)
	Domestic tax provision			18.8		19.4			12.1
Foreign
Taxes currently payable				13.8		14.3			13.1
Deferred income taxes				1.9		(1.8	)		3.5
	Foreign tax provision			15.7		12.5			16.6

		Total tax provision	$	34.5	$	31.9		$	28.7

The provision for taxes on income shown in the previous table is classified based on the location of the taxing authority, regardless of the location in which the taxable income is generated.

The major elements contributing to the difference between the U.S. federal statutory tax rate and the consolidated effective tax rate are as follows:

Percentages		2013		2012		2011

U.S. statutory tax rate		35.0	%	35.0	%	35.0	%
Depletion		(3.6	)	(3.8	)	(4.0	)
Difference between tax provided on foreign earnings
	and the U.S. statutory rate	(3.6	)	(4.0	)	(1.0	)
State and local taxes, net of Federal tax benefit		1.7		1.5		1.2
Tax credits and foreign dividends		(1.7	)	(0.1	)	(0.1	)
Change in valuation allowance		0.3		(1.1	)	(1.2	)
Impact of uncertain tax positions…………………….		(0.6	)	0.9		(2.7	)
Impact of officer's non-deductible compensation		2.3		2.1		2.9
Other		(1.9	)	(1.6	)	(1.8	)
Consolidated effective tax rate		27.9	%	28.9	%	28.3	%

The Company believes that its accrued liabilities are sufficient to cover its U.S. and foreign tax contingencies. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

Millions of Dollars		2013		2012

Deferred tax assets:
Accrued expenses	$	9.4	$	12.2
Net operating loss carry forwards		9.6		11.4
Pension and post-retirement benefits costs		21.6		43.8
Other		14.3		12.9
Valuation allowance.		(5.9)		(5.7)
Total deferred tax assets	$	49.0	$	74.6

Millions of Dollars		2013		2012

Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation	$	14.3	$	10.3
Intangible assets		13.3		12.4
Other		1.6		4.4
Total deferred tax liabilities		29.2		27.1
Net deferred tax assets	$	19.8	$	47.5

The current and long-term portion of net deferred tax assets is as follows:

Millions of Dollars		2013		2012

Net deferred tax assets, current	$	4.0	$	6.3
Net deferred assets, long term		15.8		41.2
	$	19.8	$	47.5

The current portion of the net deferred tax assets is included in prepaid expenses and other current assets. The long-term portion of the net deferred tax assets are included in other assets and deferred charges.

The Company has $4.8 million of deferred tax assets arising from tax loss carry forwards which will be realized through future operations. Carry forwards of approximately $2.3 million expire over the next 20 years, and $2.5 million can be utilized over an indefinite period.

On December 31, 2013, the Company had $3.9 million of total unrecognized tax benefits. Included in this amount were a total of $2.5 million of unrecognized income tax benefits that, if recognized, would affect the Company's effective tax rate. While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, we do not expect the change to have a significant impact on the results of operations or the financial position of the Company.

The following table summarizes the activity related to our unrecognized tax benefits:

Millions of Dollars		2013			2012

Balance as of January 1, 2013	$	4.8		$	3.9
Increases related to current year positions		0.6			0.7
Increases related to new judgments		--			0.2
Decreases related to audit settlements and statute expirations		(1.5	)		--
Other		--			--
Balance as of December 31, 2013	$	3.9		$	4.8

The Company's accounting policy is to recognize interest and penalties accrued, relating to unrecognized income tax benefits as part of its provision for income taxes. The Company had recorded $0.4 million of interest and penalties during 2013 and had a total accrued balance on December 31, 2013 of $0.6 million.

The Company operates in multiple taxing jurisdictions, both within and outside the U.S. In certain situations, a taxing authority may challenge positions that the Company has adopted in its income tax filings. The Company, with a few exceptions (none of which are material), is no longer subject to U.S. federal, state, local, and European income tax examinations by tax authorities for years prior to 2006.

Net cash paid for income taxes were $25.5 million, $21.5 million and $31.9 million for the years ended December 31, 2013, 2012 and 2011, respectively.

The Company has not provided for U.S. federal and foreign withholding taxes on $334.8 million of foreign subsidiaries' undistributed earnings as of December 31, 2013 because such earnings are intended to be permanently reinvested overseas. To the extent the parent company has received foreign earnings as dividends; the foreign taxes paid on those earnings have generated tax credits, which have substantially offset related U.S. income taxes. However, in the event that the entire $334.8 million of foreign earnings were to be repatriated, incremental taxes may be incurred. We do not believe this amount would be more than $46.0 million.