Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

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


($ in thousands)	2013			2012			2011
Domestic	$	(5,396	)	$	(6,184	)	$	(3,773	)
Non-U.S.		23,459			20,628			16,089
Total	$	18,063		$	14,444		$	12,316

Significant Components of Income Tax Provision/(Benefit)

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


($ in thousands)	2013		2012			2011
Current:
Federal	$	661	$	39		$	100
State		671		534			385
Non-U.S.		4,804		5,839			3,572
Total Current		6,136		6,412			4,057
Deferred:
Federal		7,091		(1,423	)		(119	)
State		877		(350	)		(815	)
Non-U.S.		1,962		(3,687	)		(2,070	)

Total Deferred		9,930		(5,460	)		(3,004	)
Total provision for Income Taxes	$	16,066	$	952		$	1,053

Significant Components of Deferred Tax Assets and Liabilities

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


($ in thousands)	2013			2012

Postretirement benefits	$	1,877		$	2,283
Inventory reserves		1,934			3,919
Loss carry-forwards		36,373			46,944
Credit carry-forwards		15,028			14,092
Nondeductible accruals		6,126			7,900
Research expenditures		28,606			26,475
Prepaid charges		727			4,280
Pensions		—			3,512
Other		5,476			7,974


Gross deferred tax assets		96,147			117,379

Depreciation		11,168			12,313
Pensions		19,177			—
Unrealized foreign exchange gain		350			1,103
Subsidiaries’ unremitted earnings		2,774			—
Other		696			933

Gross deferred tax liabilities		34,165			14,349


Net deferred tax assets		61,982			103,030
Deferred tax asset valuation allowance		(14,323	)		(13,087	)


Total net deferred tax assets	$	47,659		$	89,943

Reconciliation of Effective Income Taxes Rate

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


	2013			2012			2011

Taxes at the U.S. statutory rate		35.00	%		35.00	%		35.00	%
State income taxes, net of federal income tax benefit		0.95	%		(0.02	)%		(3.00	)%
Non-U.S. income taxed at rates different than the U.S. statutory rate		(9.86	)%		(8.99	)%		(20.11	)%
Benefit of scheduled tax credits		(3.88	)%		—	%		(4.38	)%
Foreign source income		60.94	%		5.64	%		—	%
Non-deductible expenses		(2.42	)%		(0.97	)%		(1.32	)%
Non-U.S. adjustments to valuation allowances		8.18	%		(5.72	)%		(1.03	)%
Nontaxable foreign gain		—	%		(11.47	)%		—	%
Change in unrecognized tax benefits		0.69	%		(8.97	)%		5.63	%
Other		(0.65	)%		2.09	%		(2.27	)%

Effective income tax rate		88.95	%		6.59	%		8.52	%

Reconciliation of Unrecognized Tax Benefits

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


($ in thousands)	2013			2012

Balance at January 1	$	4,130		$	5,279
Increase related to current year tax positions		35			35
Increase related to prior year tax positions		35			182
Decrease as a result of lapse of statute of limitations		(36	)		(881	)
Decrease related to settlements with taxing authorities		(121	)		(485	)
Balance at December 31	$	4,043		$	4,130

- 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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