Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Components of (Loss) Earnings from Continuing Operations Before Income Tax Provision

The components of (loss) earnings from continuing operations before income tax provision were as follows:


	2012			2011			2010
Domestic	$	(1,422.2	)	$	(73.6	)	$	84.0
Foreign		(449.8	)		271.6			259.4

Total	$	(1,872.0	)	$	198.0		$	343.4

Components of Income Tax (Benefit) Provision

The components of the income tax (benefit) provision were as follows:


	2012			2011			2010
Current tax expense:
Federal	$	(6.8	)	$	37.0		$	22.1
State and local		(6.2	)		5.9			5.6
Foreign		69.5			77.5			63.1

Total current		56.5			120.4			90.8

Deferred tax (benefit) expense:
Federal		(231.2	)		(54.4	)		2.1
State and local		(24.8	)		(5.3	)		(2.1	)
Foreign		(62.4	)		(1.2	)		(3.3	)

Total deferred tax benefit		(318.4	)		(60.9	)		(3.3	)

Total (benefit) provision	$	(261.9	)	$	59.5		$	87.5

Components of Deferred Tax Assets (Liabilities)

Deferred tax assets (liabilities) consist of the following:


	December 31,
	2012			2011
Settlement agreement and related accrued interest⁽¹⁾	$	442.3		$	383.8
Restructuring reserves		8.7			10.8
Accruals not yet deductible for tax purposes		74.1			67.5
Net operating loss carry forwards		132.6			124.5
Foreign, federal and state credits and investment tax allowances		53.2			130.2
Employee benefit items		129.7			125.9
Other		13.2			0.3

Gross deferred tax assets		853.8			843.0
Valuation allowance		(200.0	)		(219.1	)

Total deferred tax assets		653.8			623.9

Depreciation and amortization		(68.1	)		(72.3	)
Unremitted foreign earnings		(135.2	)		(149.8	)
Intangibles		(274.5	)		(573.3	)
Other		(10.0	)		(15.7	)

Total deferred tax liabilities		(487.8	)		(811.1	)

Net deferred tax assets (liabilities)	$	166.0		$	(187.2	)

⁽¹⁾

This deferred tax asset reflects the cash portion of the Settlement agreement and related accrued interest and the fair market value of 18 million shares of our common stock at a post-split price of $17.86 per share based on the price when the Settlement agreement was reached in 2002. However, the value of this deferred tax asset will depend on the price of our common stock at the time it is issued under the Settlement agreement. See Note 18, “Commitments and Contingencies,” for further discussion.

Federal Statutory Corporate Tax Rate Reconciles to Our Effective Income Tax Rate

The U.S. federal statutory corporate tax rate reconciles to our effective income tax rate as follows:


	2012			2011			2010
Statutory U.S. federal tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		(0.7	)		0.4			0.6
Foreign earnings taxed at lower effective rates		(0.6	)		(7.5	)		(9.2	)
Nondeductible acquisition costs		—			2.7			—
U.S. domestic manufacturing deduction		—			(2.6	)		(1.1	)
Impairment		(20.2	)
Net change in unrecognized tax benefits		2.0			0.4			—
Other		(1.5	)		1.6			0.2

Effective income tax rate		14.0	%		30.0	%		25.5	%

Unrecognized Tax Benefits and Effect on Effective Income Tax Rate

We are providing the following disclosures related to our unrecognized tax benefits and the effect on our effective income tax rate if recognized:


	Gross			Net
Unrecognized tax benefits at January 1, 2012	$	254.5		$	246.7
Additions relating to the acquisition of Diversey		15.5			12.5
Additions for tax positions of current year		23.5			23.5
Additions for tax positions of prior years		2.9			2.5
Reductions for tax positions of prior years		(63.2	)		(55.7	)

Unrecognized tax benefits at December 31, 2012	$	233.2		$	229.5

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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