Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Earnings before income taxes

Earnings before income taxes consist of the following for the years ended December 31:

($ in thousands)	2012		2011		2010
Domestic	$	13,708	$	3,559	$	(1,742	)
Non-U.S.		13,234		22,778		29,768
Total	$	26,942	$	26,337	$	28,026

Significant components of income tax provision/(benefit)

Significant components of income tax provision/(benefit) are as follows for the years ended December 31:

($ in thousands)	2012			2011			2010
Current:
Federal	$	437		$	247		$	(367	)
State		534			385			307
Non-U.S.		5,839			3,572			3,471
Total Current		6,810			4,204			3,411
Deferred:
Federal		5,163			(119	)		(266	)
State		346			(558	)		530
Non-U.S.		(5,710	)		1,843			2,313
Total Deferred		(201	)		1,166			2,577
Total provision for Income Taxes	$	6,609		$	5,370		$	5,988

Significant components of deferred tax assets and liabilities

Significant components of the CTS’ deferred tax assets and liabilities at December 31 are:

($ in thousands)	2012			2011
Postretirement benefits	$	2,283		$	2,093
Inventory reserves		3,919			2,446
Loss carryforwards		46,944			52,588
Credit carryforwards		14,092			13,700
Nondeductible accruals		7,900			6,787
Research expenditures		26,475			23,702
Prepaid charges		4,280			4,431
Pensions		3,512			1,558
Other		7,974			6,632
Gross deferred tax assets		117,379			113,937
Depreciation		12,313			9,948
Unrealized foreign exchange gain		1,103			1,625
Other		933			993
Gross deferred tax liabilities		14,349			12,566
Net deferred tax assets		103,030			101,371
Deferred tax asset valuation allowance		(13,087	)		(14,453	)
Total net deferred tax assets	$	89,943		$	86,918

Reconciliation of effective income taxes rate

The following table reconciles taxes at the United States statutory rate to the effective income tax rate for the years ended December 31:

	2012			2011			2010
Taxes at the U.S. statutory rate		35.00	%		35.00	%		35.00	%
State income taxes, net of federal income tax benefit		2.57	%		(0.43	)%		1.94	%
Non-U.S. income taxed at rates different than the U.S. statutory rate		(2.72	)%		(9.22	)%		(3.60	)%
Benefit of scheduled tax credits		—	%		(2.05	)%		(1.02	)%
Foreign source income		3.02	%		—	%		—	%
Non-U.S. adjustments to valuation allowances		(3.07	)%		(0.48	)%		(12.31	)%
Nontaxable foreign gain		(6.15	)%		—	%		—	%
Change in unrecognized tax benefits		(4.79	)%		—	%		—	%
Other		0.67	%		(2.43	)%		1.36	%
Effective income tax rate		24.53	%		20.39	%		21.37	%

Reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending unrecognized tax benefits is provided below:

($ in thousands)	2012			2011
Balance at January 1	$	5,279		$	4,586
Increase related to current year tax positions		35			88
Increase related to prior year tax positions		182			838
Decrease as a result of lapse of statute of limitations		(881	)		(65	)
Decrease related to settlements with taxing authorities		(485	)		(168	)
Balance at December 31	$	4,130		$	5,279