INCOME TAXES

12 Months Ended

Dec. 31, 2011

INCOME TAXES

INCOME TAXES

13. INCOME TAXES

        Income before income tax expense consists of the following:

	2011		2010		2009
	(in thousands)
U.S. operations	$	67,379	$	32,123	$	44,199
Foreign operations		21,447		8,724		(404	)
	$	88,826	$	40,847	$	43,795

        Income tax expense is comprised of the following:

	2011			2010			2009
	(in thousands)
Current:
Federal	$	16,794		$	1,488		$	9,151
State		3,561			1,426			1,822
Foreign		7,900			2,834			244
Total current		28,255			5,748			11,217
Deferred:
Federal	$	4,087		$	7,044		$	5,593
State		695			420			775
Foreign		(2,222	)		(389	)		(1,143	)
Total deferred		2,560			7,075			5,225
Income tax expense	$	30,815		$	12,823		$	16,442

        The following table sets forth the tax effects of temporary differences that give rise to the deferred tax assets and liabilities:

	December 31, 2011			December 31, 2010
	(in thousands)
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts	$	1,514		$	1,365
Inventories		2,762			3,344
Net operating loss carryforwards		10,957			10,784
Accrued pension		26,924			17,242
Stock-based compensation		7,343			4,883
Compensation-related accruals		3,103			3,429
Warranty		3,459			2,884
Obligation for postretirement benefits other than pension		4,467			10,270
Interest Rate Swap Agreements		—			1,928
Accrued liabilities and other items		4,037			4,218
Gross deferred tax assets		64,566			60,347
Valuation allowance		(9,454	)		(9,378	)
Net deferred tax assets		55,112			50,969
Deferred tax liabilities:
Intangibles		82,841			80,439
Plant and equipment		11,361			13,443
Gross deferred tax liabilities		94,202			93,882
Net deferred tax liabilities	$	(39,090	)	$	(42,913	)

        Income taxes paid, net of refunds received, by the Company during 2011, 2010, and 2009 totaled $13,542,000, $539,000, and $27,121,000 respectively.

        As of December 31, 2011, the Company had net operating loss carryforwards totaling approximately $38,893,000 in various foreign tax jurisdictions which may be carried forward between five years and an unlimited time. The Company provides a valuation allowance against certain net foreign deferred tax assets (principally the net operating loss carryforwards) due to the uncertainty that they can be realized. Changes to this valuation allowance in any future period will be recorded as an income tax benefit in our statement of operations.

        During 2011, the Company increased the valuation allowance by $219,000 in connection with the benefits associated with net operating loss carry forwards that the Company concluded would not be realized. This entire amount was reflected as a foreign deferred income tax expense in our statement of operations for the current year. There was also a decrease in the valuation allowance of $143,000 related to foreign exchange.

        The following table sets forth a reconciliation of the statutory federal income tax rate to the effective income tax rate:

	2011			2010			2009
Federal statutory tax rate		35.0	%		35.0	%		35.0	%
Increase (decrease) in the tax rate resulting from:
State taxes, net of federal effect		3.0			2.1			3.8
Effect of tax rates of other countries		(2.2	)		(.7	)		(1.6	)
Foreign Tax Credit-Amended Returns		—			(6.9	)		—
Section 199 deduction		(1.7	)		(.4	)		(0.7	)
Other		0.6			2.3			1.2
Effective tax rate		34.7	%		31.4	%		37.7	%

        During the second quarter of 2010, the Company filed amended Federal Income Tax Returns in order to claim Foreign Tax Credits for the years 2005 through 2008. The Company realized a $2.8 million benefit, during the year ended December 31, 2010 as a result of the filing of these amended returns.

        The Company has not made provisions for U.S. federal and state income taxes as of December 31, 2011 on approximately $105.2 million of foreign earnings that are expected to be reinvested indefinitely. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. federal and state income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries.

        As of December 31, 2011 and 2010, the Company had unrecognized tax benefits of approximately $2.0 million. The entire amount of the unrecognized tax benefits would reduce the effective tax rate if recognized.

        The following table summarizes the activity related to our unrecognized tax benefits during 2011, 2010 and 2009:

	2011			2010			2009
	(in thousands)			(in thousands)			(in thousands)
Balance, beginning of the year	$	1,953		$	1,821		$	1,673
Additions for tax positions related to the current year		189			112			106
Additions for tax positions related to the prior year		—			69			79
Decreases for tax positions related to the prior year		—			(46	)		—
Prior year reductions
Settlements with taxing authorities		—			(47	)		(17	)
Lapse of statute of limitations		(137	)		(119	)		(120	)
Change in exchange rate		39			163			100
Balance, end of the year	$	2,044		$	1,953		$	1,821

        During the years ended December 31, 2011, 2010 and 2009, the Company recognized approximately $0.1 million of interest and penalties, net of deferred taxes. The Company has accrued approximately $0.7 million for the payment of interest and penalties at December 31, 2011, and $0.6 million for the payment of interest and penalties at December 31, 2010.

        As of December 31, 2011, the Company is subject to U.S. Federal Income Tax examination for the tax years 2008 through 2011, and to non-U.S. income tax examination for the tax years 2003 to 2011. In addition, the Company is subject to state and local income tax examinations for the tax years 2006 through 2011.

        There are no tax positions included in unrecognized tax benefits at December 31, 2011 for which it is reasonably possible that the total amounts could significantly change during the next twelve months.