Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Components of income tax expense (benefit)

Earnings before income taxes and the provision for income taxes are presented in the following table.

	Year Ended December 31,
(millions of dollars)	2013			2012			2011
Earnings before income taxes:
U.S.	$	136.2		$	132.3		$	119.2
Non-U.S.	733.1			628.7			646.7
Total	$	869.3		$	761.0		$	765.9
Provision for income taxes:
Current:
Federal	$	27.7		$	59.8		$	31.8
State	2.6			3.4			1.7
Foreign	211.1			186.1			162.9
Total current	241.4			249.3			196.4
Deferred:
Federal	(2.3		)	19.6			17.3
State	(7.3		)	(0.1		)	0.1
Foreign	(13.5		)	(30.2		)	(18.5		)
Total deferred	(23.1		)	(10.7		)	(1.1		)
Total provision for income taxes	$	218.3		$	238.6		$	195.3

Effective Income Tax Rate Reconciliation

An analysis of the differences between the effective tax rate and the U.S. statutory rate for the years ended December 31, 2013, 2012 and 2011 is presented below.

	Year Ended December 31,
(millions of dollars)	2013			2012			2011
Income taxes at U.S. statutory rate of 35%	$	304.3		$	266.4		$	268.1
Increases (decreases) resulting from:
State taxes, net of federal benefit	2.3			2.2			1.1
U.S. tax on non-U.S. earnings	(2.8		)	22.3			9.4
Affiliates' earnings	(15.6		)	(15.0		)	(13.4		)
Foreign rate differential	(73.4		)	(57.9		)	(60.0		)
Tax holidays	(15.6		)	(27.0		)	(21.3		)
Withholding taxes	15.4			12.3			10.9
Impairments and write-offs	5.2			15.9			6.4
Tax credits	(6.9		)	(2.3		)	(4.0		)
Reserve adjustments, settlements and claims	0.5			12.9			(1.0		)
Valuation allowance adjustments	(1.4		)	9.7			(5.3		)
Other	6.3			(0.9		)	4.4
Provision for income taxes, as reported	$	218.3		$	238.6		$	195.3

Reconciliation of the total gross unrecognized tax benefits

(millions of dollars)	2013			2012
Balance, January 1	$	25.8		$	26.2
Additions based on tax positions related to current year	1.7			2.0
Additions for tax positions of prior years	12.5			13.4
Reductions for closure of tax audits and settlements	(17.7		)	(14.6		)
Reductions for lapse in statute of limitations	(0.2		)	(1.7		)
Translation adjustment	0.8			0.5
Balance, December 31	$	22.9		$	25.8

Tax jurisdiction

The Company is no longer subject to income tax examinations by tax authorities in its major tax jurisdictions as follows:

Tax jurisdiction	Years no longer subject to audit	Tax jurisdiction	Years no longer subject to audit
U.S. Federal	2010 and prior	Hungary	2008 and prior
China	2007 and prior	Japan	2011 and prior
France	2007 and prior	South Korea	2007 and prior
Germany	2007 and prior	Sweden	2007 and prior

Deferred Tax Assets (Liabilities)

The gross components of deferred tax assets and liabilities as of December 31, 2013 and 2012 consist of the following:

	December 31,
(millions of dollars)	2013			2012
Deferred tax assets:
Foreign tax credits	$	145.9		$	146.0
Employee compensation	40.6			53.1
Other comprehensive income	79.3			113.7
Research and development capitalization	132.4			102.5
Net operating loss and capital loss carryforwards	46.4			44.3
Pension and other postretirement benefits	36.5			37.7
Other	75.8			44.1
Total deferred tax assets	$	556.9		$	541.4
Valuation allowance	(34.2		)	(35.0		)
Net deferred tax asset	$	522.7		$	506.4
Deferred tax liabilities:
Goodwill and intangible assets	(139.5		)	(130.9		)
Fixed assets	(105.4		)	(101.9		)
Other	(36.7		)	(25.6		)
Total deferred tax liabilities	$	(281.6	)	$	(258.4	)
Net deferred taxes	$	241.1		$	248.0