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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Components of income (loss) from continuing operations before taxes and noncontrolling interest

Income (loss) from continuing operations before taxes and noncontrolling interests consists of the following components:

	Years ended December 31,
	2011		2010		2009

Domestic	$	2,143	$	32,493	$	(54,041	)
Foreign		328,973		373,040		14,326
	$	331,116	$	405,533	$	(39,715	)

Components of income taxes

Significant components of income taxes are as follows:

	Years ended December 31,
	2011			2010			2009

Current:
Federal	$	10,968		$	9,823		$	817
State and local		(801	)		2,434			505
Foreign		66,844			59,459			28,435
		77,011			71,716			29,757
Deferred:
Federal		6,188			(949	)		(6,332	)
State and local		(2,286	)		2,108			286
Foreign		10,206			(27,635	)		(6,911	)
		14,108			(26,476	)		(12,957	)
Total income tax expense	$	91,119		$	45,240		$	16,800

Deferred tax assets and liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	December 31,
	2011			2010
Deferred tax assets:
Pension and other retiree obligations	$	48,810		$	44,054
Inventories		10,711			11,346
Net operating loss carryforwards		106,621			158,264
Tax credit carryforwards		11,225			11,871
Other accruals and reserves		40,494			53,369
Total gross deferred tax assets		217,861			278,904
Less valuation allowance		(102,863	)		(145,201	)
		114,998			133,703
Deferred tax liabilities:
Tax over book depreciation		(16,208	)		(20,425	)
Earnings not permanently reinvested		(25,960	)		(39,074	)
Convertible debentures		(105,830	)		(64,440	)
Other - net		(2,515	)		(2,572	)
Total gross deferred tax liabilities		(150,513	)		(126,511	)

Net deferred tax assets (liabilities)	$	(35,515	)	$	7,192

Federal statutory income tax rate reconciliation

A reconciliation of income tax expense at the U.S. federal statutory income tax rate to actual income tax provision is as follows:

	Years ended December 31,
	2011			2010			2009
Tax at statutory rate	$	115,891		$	141,937		$	(13,900	)
State income taxes, net of U.S. federal tax benefit		(2,005	)		2,952			513
Effect of foreign operations		(52,609	)		(69,034	)		14,731
Unrecognized tax benefits		4,869			(1,823	)		1,395
Change in valuation allowance on U.S. deferred tax asset		-			(36,229	)		-
Change in valuation allowance on non-U.S. deferred tax assets		(5,554	)		(21,671	)		715
Tax benefit of operating loss carryforwards		(1,588	)		(8,799	)		(2,158	)
Foreign income taxable in the U.S.		22,822			31,294			976
Tax on foreign dividends paid to the U.S.		15,453			1,417			-
U.S. foreign tax credits		(12,322	)		-			-
Effect of statutory rate changes on deferred tax assets		9,040			1,128			1,995
Settlement agreement gain		-			-			(9,868	)
Non-deductible expenses related to VPG spin-off		-			1,945			1,265
Executive employment agreement charges		173			222			20,238
Other		(3,051	)		1,901			898
Total income tax expense	$	91,119		$	45,240		$	16,800

Net operating loss carryforwards

At December 31, 2011, the Company had the following significant net operating loss carryforwards for tax purposes:

		Expires
Austria	$7,876	No expiration
Belgium	184,610	No expiration
Brazil	19,674	No expiration
Germany	46,098	No expiration
Israel	128,425	No expiration
Netherlands	42,791	2012 - 2019

Summary of significant tax credit carryforwards available

At December 31, 2011, the Company had the following significant tax credit carryforwards available:

		Expires
U.S. alternative minimum tax	$4,696	No expiration
U.S. foreign tax credit	1,198	2020
California research credit	6,834	No expiration

Unrecognized tax benefits

The following table summarizes changes in the liabilities associated with unrecognized tax benefits:

	Years ended December 31,
	2011			2010			2009

Balance at beginning of year	$	54,285		$	54,463		$	47,778
Addition based on tax positions related to the current year		2,459			1,916			2,491
Addition based on tax positions related to prior years		10,918			3,090			4,684
Currency translation adjustments		(922	)		451			417
Reduction based on tax positions related to prior years		(3,293	)		(670	)		-
Reduction for settlements		(9,604	)		(3,289	)		(737	)
Reduction for lapses of statute of limitation		(35	)		(1,676	)		(170	)
Balance at end of year	$	53,808		$	54,285		$	54,463

- 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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- Definition

Tabular disclosure of tax credit carryforwards available to reduce future taxable income, including amounts, expiration dates, limitations on use and the related deferred tax assets and valuation allowances.

+ References+ Details