INCOME TAXES

The components of income before income tax expense for 2012, 2011 and 2010 are as follows (in thousands):



	2012		2011		2010

United States	$	135,992	$	115,413	$	86,985
Other countries	152,468		123,429		122,163
Income before income tax expense	$	288,460	$	238,842	$	209,148

The components of income tax expense for 2012, 2011 and 2010 are as follows (in thousands):



	2012			2011			2010
Current:
United States	$	42,934		$	43,632		$	38,704
Other countries	20,965			11,515			30,357
State and provincial	4,344			5,600			4,821
	68,243			60,747			73,882
Deferred:
United States	963			(8,905		)	(9,699		)
Other countries	2,677			2,892			100
State and provincial	(35		)	(536		)	(536		)
Total deferred	3,605			(6,549		)	(10,135		)
Income tax expense	$	71,848		$	54,198		$	63,747

The differences in income tax expense computed using The Netherlands statutory income tax rate of 25%, 25% and 25.5% in 2012, 2011 and 2010, respectively, and our income tax expense as reported in the accompanying Consolidated Statements of Operations for 2012, 2011 and 2010 are as follows (in thousands):



	2012			2011			2010

Tax at The Netherlands income tax rate	$	72,115		$	59,711		$	53,333
International earnings taxed at rates other than The Netherlands statutory rate	(864		)	(241		)	3,698
Non-deductible expenses	917			2,691			2,524
Change in valuation allowance	(2,099		)	(1,279		)	75
State and provincial taxes	2,895			3,166			2,597
Adjustments of prior year taxes	1,038			(17,229		)	(389		)
Adjustments of income tax reserves	(4,374		)	7,050			4,093
Other	2,220			329			(2,184		)
Income tax expense	$	71,848		$	54,198		$	63,747

Included in Adjustments of prior year taxes in 2011 is the reversal of $10.4 million in tax liabilities provided over the period 2007-2010 as a result of recently concluded audits of prior year returns. The remainder reflects adjustments between the tax accrual for prior year taxes and the tax liability reported in the filed tax returns.

Deferred tax assets and liabilities result from various temporary differences between the financial statement carrying amount and their tax basis. Deferred tax assets and liabilities as of December 31, 2012 and 2011 are summarized as follows (in thousands):



	2012			2011
Deferred tax assets:
Net operating loss carry-forwards	$	5,866		$	7,143
Tax credit carry-forwards	3,123			5,483
Reserves	13,497			9,804
Unrealized benefit plan loss	586			1,200
Other	5,419			9,857
	28,491			33,487
Valuation allowance	(7,243		)	(9,342		)
Net deferred tax asset	21,248			24,145
Deferred tax liabilities:
Intangibles	(1,751		)	(2,174		)
Property, plant and equipment	(5,540		)	(3,203		)
Other	(3,624		)	(4,830		)
Total deferred tax liabilities	(10,915		)	(10,207		)
Net deferred income taxes	$	10,333		$	13,938

	2012			2011

Current deferred tax assets	$	8,024		$	10,483
Current deferred tax liabilities	(4,138		)	(4,676		)
Long-term deferred tax assets	13,224			13,662
Long-term deferred tax liabilities	(6,777		)	(5,531		)
Total deferred tax assets (liabilities)	$	10,333		$	13,938

At December 31, 2012, we had tax net operating loss carry-forwards in various tax jurisdictions of approximately $24.7 million. Although we cannot be certain that these operating loss carry-forwards will be utilized, we anticipate that we will have sufficient taxable income in future years to allow us to fully utilize the carry-forwards that are not subject to a valuation allowance as of December 31, 2012. If unused, those carry-forwards which are subject to expiration may expire during the years 2013 through 2022. At December 31, 2012, we maintained a valuation allowance of $5.5 million on our net operating loss carry-forwards. During 2012, $15 thousand of operating loss carry-forwards which carried a full valuation allowance expired unused.

Our senior exchangeable notes ("Exchangeable Notes") fully matured and were settled in 2011 which resulted in a reversal of the related deferred tax liability of $13.9 million that was established for the difference between the book and tax basis of the Exchangeable Notes.

We file income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. We are currently undergoing multiple examinations in various jurisdictions, and the years 1999 through 2010 remain open for examination in various tax jurisdictions in which we operate.

During 2012, adjustments were made to estimates for uncertain tax positions in certain tax jurisdictions based upon changes in facts and circumstances, resulting in a reduction to the unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



	2012			2011			2010

Unrecognized tax benefits at January 1,	$	14,027		$	9,986		$	8,324
Tax positions, current period	1,845			1,512			1,149
Tax positions, prior period	(3,293		)	4,959			2,181
Settlements with taxing authorities	—			—			(555		)
Lapse of applicable statute of limitations	(2,260		)	(2,430		)	(1,113		)
Unrecognized tax benefits at December 31,	$	10,319		$	14,027		$	9,986

Changes in our estimate of unrecognized tax benefits would affect our effective tax rate.

Our policy is to record accrued interest and penalties on uncertain tax positions, net of any tax effect, as part of total tax expense for the period. The corresponding liability is carried along with the tax exposure as a non-current payable in Other Long-term Liabilities. For the years ended December 31, 2012, 2011 and 2010, we had approximately $1.5 million, $3.0 million and $2.9 million, respectively, accrued for the payment of interest and penalties.

During 2012, we recognized tax benefits of $5.2 million relating to tax deductions in excess of book expense for stock-based compensation awards. These tax benefits are recorded to Additional Paid-in Capital to the extent deductions reduce current taxable income as we are able to realize the tax benefits.