Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

Note 13. Income Taxes

     The provision for income taxes results in effective tax rates different from the statutory rates. The following is a reconciliation between the statutory United States Federal income tax rate and the Company’s effective income tax rate:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011			2010
Statutory rate		35.0	%		35.0	%		35.0	%		35.0	%
State taxes		3.2			1.2			2.8			2.1
Tax settlements		0.0			11.6			0.0			6.5
Changes in tax reserves		(0.9	)		(16.9	)		0.3			(12.7	)
Foreign tax adjustments		2.1			(0.9	)		0.3			0.4
Other, net		0.6			2.5			1.2			2.8
Effective rate		40.0	%		32.5	%		39.6	%		34.1	%

     We are currently under two separate Internal Revenue Service (“IRS”) examination cycles for the years ended 2004 through 2005 and 2006 through 2008. Our statute of limitations therefore remains open from the year ended December 31, 2004 and forward. Our 2004-2005 exam cycle is currently under administrative appeal for certain unresolved issues. We expect this cycle to be effectively settled during the first or second quarter of 2012. Additionally, the 2006-2008 cycle is still in the examination level and thus, we are unable to determine how long these periods will remain open.

     The 2003 tax year of one of our Mexican subsidiaries is still under review and thus its statute of limitations remains open. The 2004 and 2005 statute of limitations of all of our Mexican subsidiaries are closed and the 2006 and forward years remain open.

     During the third quarter ended September 30, 2011, we effectively settled an audit of one of our Swiss subsidiaries which covered the years 2006 through 2009. There was no impact to the income statement as a result of the settlement.

     Our various other European subsidiaries, including subsidiaries that were sold in 2006, are impacted by various statutes of limitations which are generally open from 2003 forward. An exception to this is our discontinued operations in Romania, which have been audited through 2004.

     Generally, states’ statutes of limitations in the United States are open from 1998 forward because we filed amended tax returns to reflect previous IRS adjustments. We expect the 1998-2001 state statutes of limitations to close by the end of 2011.

     The change in unrecognized tax benefits for the nine months ended September 30, 2011 and 2010 was as follows:

	Nine Months Ended
	September 30,
	2011			2010
	(in millions)
Beginning balance	$	36.8		$	40.1
Additions for tax positions related to the current year		2.9			2.6
Additions for tax positions of prior years		15.1			6.0
Reductions for tax positions of prior years		(0.1	)		(5.3	)
Settlements		(3.5	)		(8.1	)
Expiration of statute of limitations		(0.5	)		(0.5	)
Ending balance	$	50.7		$	34.8

     Additions for tax positions related to the current year in the amounts of $2.9 million and $2.6 million recorded in the nine months ended September 30, 2011 and 2010, respectively, were amounts provided for tax positions previously taken in foreign jurisdictions and tax positions taken for Federal and state income tax purposes as well as deferred tax liabilities that have been reclassified to uncertain tax positions.

     Additions for tax positions of prior years for the nine months ended September 30, 2011 and 2010 of $15.1 million and $6.0, million, respectively, are primarily due to Federal tax positions taken on prior year returns that have been proposed by the IRS but not previously reserved. These items are primarily timing differences and thus we would be allowed a future tax deduction. We have recorded a corresponding deferred tax asset for the future reduction of taxes related to these adjustments.

     Settlements during the nine months ended September 30, 2011 primarily relate to the audit of a Swiss subsidiary that resulted in the payment of $2.8 million of taxes and interest. Subsequent to the payment of the taxes, we applied for and received treaty relief from the Swiss tax authorities and received $1.8 million in tax refunds. The tax that was not refunded is creditable against future US income tax and thus is being carried as a deferred tax asset.

     The total amount of unrecognized tax benefits including interest and penalties at September 30, 2011 and 2010, that would affect the Company’s effective tax rate if recognized was $18.8 million and $14.9 million, respectively.

     Trinity accounts for interest expense and penalties related to income tax issues as income tax expense. Accordingly, interest expense and penalties associated with an uncertain tax position are included in the income tax provision. The total amount of accrued interest and penalties as of September 30, 2011 and December 31, 2010 was $12.8 million and $11.2 million, respectively. Income tax expense for the three and nine months ended September 30, 2011, included a decrease in income tax expense of $0.3 million and an increase of $1.5 million, respectively, in interest expense and penalties related to uncertain tax positions. Income tax expense for the three and nine months ended September 30, 2010, included a reduction in income tax expense of $3.2 million and $5.5 million, respectively, in interest expense and penalties related to uncertain tax positions.