Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

9.    Income Taxes

The provisions for taxes on income and the related income before taxes for the years ended December 31, 2012, 2011 and 2010, were as follows:

(In thousands)	2012			2011			2010
Taxes on Income
Federal
Current	$	23,744		$	16,901		$	17,706
Deferred		(525	)		4,894			4,020
State
Current		1,999			3,677			2,327
Deferred		(537	)		174			453
Foreign
Current		10,158			6,658			10,490
Deferred		1,196			(12	)		892
Total	$	36,035		$	32,292		$	35,888
Income before Taxes
Domestic	$	80,371		$	83,333		$	65,690
Foreign		35,351			21,561			35,789
Total	$	115,722		$	104,894		$	101,479

The variations between the effective and statutory U.S. federal income tax rates are summarized as follows:

(In thousands)	2012 Amount			%			2011 Amount			%			2010 Amount			%
Federal income tax provision at statutory tax rate	$	40,503			35.0		$	36,713			35.0		$	35,518			35.0
State tax provision on income less applicable federal tax benefit		1,470			1.3			2,413			2.3			1,807			1.8
Foreign income taxed at different rates		(1,172	)		(1.0	)		(900	)		(0.9	)		(1,144	)		(1.1	)
Effect of equity in foreign joint venture		—			—			—			—			954			0.9
Repatriation of foreign earnings		24			—			—			—			543			0.5
Domestic production activities deduction		(1,446	)		(1.2	)		(1,339	)		(1.3	)		(1,446	)		(1.4	)
Nontaxable foreign interest income		(2,690	)		(2.3	)		(2,719	)		(2.6	)		(81	)		(0.1	)
U.S. tax credits		—			—			(1,482	)		(1.4	)		(969	)		(1.0	)
Non-deductible expenses and other items, net		(654	)		(0.7	)		(394	)		(0.3	)		706			0.8
Total income tax provision	$	36,035			31.1		$	32,292			30.8		$	35,888			35.4

At December 31, 2012 and 2011, the tax effects of significant temporary differences representing deferred tax assets and liabilities were as follows:

(In thousands)	2012			2011
Deferred Tax Assets:
Pensions	$	15,148		$	14,442
Deferred revenue		718			139
Other accruals and reserves		10,979			11,735
Inventories		496			217
Legal and environmental accruals		6,463			6,679
Deferred compensation		17,461			14,347
Bad debt and rebate reserves		2,884			3,353
Subsidiaries net operating loss carryforwards		1,390			1,991
Tax credit carryforwards		532			31
	$	56,071		$	52,934
Deferred Tax Liabilities:
Depreciation	$	(50,011	)	$	(47,218	)
Amortization of intangibles		(456	)		(829	)
Unrealized foreign exchange loss		(602	)		(1,049	)
Other		(918	)		(640	)
	$	(51,987	)	$	(49,736	)
Valuation Allowance	$	(603	)	$	(742	)
Net Deferred Tax Assets	$	3,481		$	2,456
Reconciliation to Consolidated Balance Sheet:
Current deferred tax assets	$	9,876		$	8,769
Non-current deferred tax assets (in other non-current assets)		2,805			2,331
Non-current deferred tax liabilities		(9,200	)		(8,644	)
Net Deferred Tax Assets	$	3,481		$	2,456

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently reinvested amounted to $161,942,000 at December 31, 2012, compared to $139,857,000 at December 31, 2011. In general, the Company reinvests earnings of foreign subsidiaries in their operations indefinitely. However, the Company will repatriate earnings from a subsidiary where excess cash has accumulated and it is advantageous for tax or foreign exchange reasons. Because of the probable availability of foreign tax credits, it is not practicable to estimate the amount, if any, of the deferred tax liability on earnings reinvested indefinitely.

Tax loss carryforwards at December 31, 2012, amounted to $6,753,000 compared with $9,087,000 at the end of 2011. Of the tax loss carryforwards, $301,000 expire in 2013, $381,000 expire in 2014, $1,573,000 expire in 2015, $3,699,000 expire in 2016, $125,000 expire in 2017, $104,000 expire in 2018, $62,000 expire in 2019, $128,000 expire in 2020, and $380,000 expire in 2021. Tax credit carryforwards at December 31, 2012, amounted to $532,000 compared to $31,000 at December 31, 2011. Of the tax credit carryforwards, $16,000 expire in 2013, $351,000 expire in 2016, and $165,000 expire in 2017.

At December 31, 2012, the Company had valuation allowances of $603,000, which were primarily attributable to deferred tax assets in India and the Philippines. The realization of deferred tax assets is dependent on the generation of sufficient taxable income in the appropriate tax jurisdictions. The Company believes that it is more likely than not that the related deferred tax assets will not be realized.

As of December 31, 2012 and 2011, unrecognized tax benefits totaled $289,000 and $1,232,000, respectively. The amount of unrecognized tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future periods, net of the federal benefit on state issues, was approximately $275,000, $1,023,000 and $1,720,000 at December 31, 2012, 2011 and 2010, respectively. The Company does not believe that the amount of unrecognized tax benefits related to its current uncertain tax positions will change significantly over the next 12 months.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as income tax expense. In 2012, $444,000 of net interest and penalty income was recognized compared to $2,000 of net interest and penalty income in 2011 and $26,000 of net interest and penalty expense in 2010. At December 31, 2012, the liability for interest and penalties was $41,000 compared to $486,000 at December 31, 2011.

During 2012, the Company negotiated and finalized ten state income tax voluntary disclosure agreements. As a result, the Company recorded a net tax benefit of $688,000.

The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is not subject to U.S. federal income tax examinations by tax authorities for years before 2009. Some foreign jurisdictions and various U.S. states jurisdictions may be subject to examination back to 2006.

Below are reconciliations of the January 1 and December 31 balances of unrecognized tax benefits for 2012, 2011 and 2010:

(In thousands)	2012			2011			2010
Unrecognized tax benefits, opening balance	$	1,232		$	1,902		$	2,052
Gross increases – tax positions in prior period		—			—			—
Gross decreases – tax positions in prior period		(569	)		(795	)		(90	)
Gross increases – current period tax positions		44			213			152
Settlements		—			(38	)		—
Foreign currency translation		23			(8	)		(16	)
Lapse of statute of limitations		(441	)		(42	)		(196	)
Unrecognized tax benefits, ending balance	$	289		$	1,232		$	1,902