Income Taxes	9 Months Ended
Sep. 30, 2012
Income Taxes	Note 6. Income Taxes: At September 30, 2012, we had $34.6 million of unrecognized tax benefits recorded in Other liabilities and $4.5 million recorded in Other current liabilities. If these unrecognized tax benefits were recognized, the effective tax rate would be affected. For the nine months ended September 30, 2012, the Company reduced its accrual for interest and penalties by $(5.4) million, net, principally due to payments made pursuant to the Spanish tax settlement, as discussed below. At September 30, 2012, the Company had accrued interest and penalties of $7.3 million classified in Other liabilities. From time to time we repatriate a portion of current earnings from non–U.S. subsidiaries. We do not reserve for additional taxes on that portion of undistributed earnings of subsidiary companies that are intended and planned to be indefinitely invested in such subsidiaries to fund local operations and/or capital projects. However, if we were to elect to repatriate these amounts, we would generate U.S. taxable income, depending on the amounts to be repatriated and from which country. The Company has ongoing income tax audits and legal proceedings which are at various stages of administrative or judicial review, of which the material items are discussed below. In addition, the Company has other ongoing tax audits and legal proceedings that relate to indirect taxes, such as value-added taxes, capital tax, sales and use and property taxes, which are discussed in Note 11. Prior to and during the third quarter, the most significant income tax disputes in which the Company was involved related to various income tax assessments imposed by the Spanish tax authorities against the Company’s Spanish subsidiaries. As a result of tax audits for the 2002-2003 and the 2004-2006 fiscal years, the Spanish tax authorities had challenged certain tax positions taken in the Spanish subsidiaries’ tax returns and imposed assessments of Euro 22.0 million ($28.3 million) including estimated interest through September 30, 2012 and Euro 62.8 million ($78.3 million), including interest, prior to the August 1, 2012 settlement as discussed below. In addition, as the challenged income tax positions had also been taken by the Spanish subsidiaries for the 2007-2011 fiscal years, the Company was subject to similar challenges for those subsequent periods. On August 1, 2012, the Company reached an overall settlement with the Spanish tax authorities regarding the income tax deductions taken by its Spanish subsidiaries for the 2004-2010 years. Pursuant to the settlement, the Company and the Spanish tax authorities agreed to settle all disputes and claims arising from the Company’s Spanish subsidiaries’ income tax returns for the 2004-2010 fiscal years in exchange for an agreed-upon payment of Euro 86.0 million ($105.7 million), in the aggregate. During the third quarter, the Company made payments totaling Euro 84.0 million ($105.5 million based exchange rates at the respective payment dates), pursuant to the settlement. The Company expects to pay the remaining amounts in the fourth quarter of 2012. As part of the overall settlement, the Company and the Spanish tax authorities also preliminarily agreed upon the key principles to be incorporated into a multi-year agreement that will establish the tax basis for the Company’s activities in Spain beginning in 2012. The terms and conditions of the proposed agreement, which are expected to be finalized in the fourth quarter of 2012, are not expected to have a material impact on the Company’s effective tax rate for the 2012 fiscal year. The settlement agreement did not address the income tax returns filed for the 2002-2003 fiscal years, as these were further along in the Spanish judicial process, and the Company intends to continue to challenge these assessments. In addition, the settlement agreement did not address the 2011 fiscal year, as the Spanish subsidiaries’ 2011 tax return was not filed until late July 2012. Based on the tax settlement, the Company increased its liabilities for uncertain tax positions for years not settled. Based on the tax settlement, the Company recorded an after-tax charge in the third quarter of 2012 of $72.4 million, which included $56.0 million related to the tax settlement of the 2004-2010 period and the increased liabilities for uncertain tax positions of $16.4 million for years not settled. In order to proceed with its appeals of the tax assessments for the 2002-2003 fiscal years and the 2004-2006 fiscal years, the Company was required to post bank guarantees. As of September 30, 2012, the Company had posted bank guarantees of Euro 21.6 million ($27.8 million) associated with the 2002-2003 appeals. As a result of the settlement payments made during the third quarter 2012, the Company reduced, during the period, the amount of outstanding bank guarantees related to the 2004-2006 fiscal years by Euro 60.1 million ($77.4 million) and expects to reduce its bank guarantees by an additional Euro 1.5 million ($1.9 million) upon payment of the final amounts due pursuant to the tax settlement. In addition to the above, the Company has also been a party to four dividend withholding tax controversies in Spain in which the Spanish tax authorities alleged that the Company’s Spanish subsidiaries underpaid withholding taxes during the 1995-2001 fiscal years. The Company had previously appealed each of these controversies. At September 30, 2012, the aggregate amount of these dividend withholding controversies was Euro 18.7 million ($24.0 million), including estimated interest, for which the Company is fully reserved. During the first nine months of 2012, the Company received unfavorable decisions on the first three cases and recorded charges (including estimated interest) aggregating $14.3 million ($12.4 million after-tax), of which $8.4 million is reflected in income taxes payable at September 30, 2012. The Company made total payments of $10.6 million during the nine months ended September 30, 2012, and expects to make an additional $2.1 million payment by the end of 2012. As of September 30, 2012, the Company had posted remaining bank guarantees of Euro 9.6 million ($12.3 million) in order to proceed with these appeals. The fourth and final remaining appeal has not yet been heard by the Spanish Supreme Court. As of September 30, 2012, the Company’s liability for uncertain tax positions arising from the Spanish withholding tax controversies was $3.6 million in the aggregate. As of September 30, 2012, the Company’s aggregate provisions for uncertain tax positions, including interest and penalties, is $46.4 million, which includes $23.3 million associated with the tax deductions taken by our Spanish subsidiaries, $3.6 million associated with our Spanish dividend withholding tax controversies and the remainder associated with various other tax positions asserted in foreign jurisdictions, none of which is individually material. In addition, the Company has several other tax audits in process and has open tax years with various taxing jurisdictions that range primarily from 2002 to 2011. Based on currently available information, we do not believe the ultimate outcome of any of these tax audits and other tax positions related to open tax years, when finalized, will have a material impact on our financial position, reported results or liquidity. The effective tax rate for the three months ended September 30, 2012 was 86.6% (substantially driven by the Spanish tax settlement) compared with 26.9% for the three months ended September 30, 2011. The effective tax rate for 2012 third quarter includes a $72.4 million charge based on the overall Spanish tax settlement as discussed above. In addition, as part of the overall settlement, the Company and the Spanish tax authorities have also preliminarily agreed upon the key principles to be incorporated into an agreement that will establish the tax basis for the Company’s activities in Spain for 2012 and future years and accordingly, in the third quarter of 2012 the Company recorded an adjustment of $2.6 million to increase accrued income taxes. The period-over-period increase also reflects the absence of an R&D tax credit in the U.S. during the third quarter of 2012 as compared to the 2011 period. The effective tax rate for the nine months ended September 30, 2012 was 47.6% (substantially driven by the Spanish tax settlement) compared with 27.2% for the nine months ended September 30, 2011. The effective tax rate for the 2012 nine month period includes a $72.4 million charge based on the overall Spanish tax settlement comprised as discussed above. The nine month period ended September 30, 2012 also includes a $10.6 million benefit due to a corporate restructuring charge of certain of our foreign subsidiaries that was offset by $14.3 million of provisions related to the Spanish dividend withholding tax cases and other reserve adjustments on uncertain tax positions. The 2011 period included a $5.8 million write-off of deferred tax assets as a result of U.S. state law changes enacted during the third quarter of 2011 that was partially offset by several items, including approximately $3.0 million related to adjustments on uncertain tax positions and a favorable mix in earnings and remittances.

Note 6. Income Taxes:

At September 30, 2012, we had $34.6 million of unrecognized tax benefits recorded in Other liabilities and $4.5 million recorded in Other current liabilities. If these unrecognized tax benefits were recognized, the effective tax rate would be affected.

For the nine months ended September 30, 2012, the Company reduced its accrual for interest and penalties by $(5.4) million, net, principally due to payments made pursuant to the Spanish tax settlement, as discussed below. At September 30, 2012, the Company had accrued interest and penalties of $7.3 million classified in Other liabilities.

From time to time we repatriate a portion of current earnings from non–U.S. subsidiaries. We do not reserve for additional taxes on that portion of undistributed earnings of subsidiary companies that are intended and planned to be indefinitely invested in such subsidiaries to fund local operations and/or capital projects. However, if we were to elect to repatriate these amounts, we would generate U.S. taxable income, depending on the amounts to be repatriated and from which country.

The Company has ongoing income tax audits and legal proceedings which are at various stages of administrative or judicial review, of which the material items are discussed below. In addition, the Company has other ongoing tax audits and legal proceedings that relate to indirect taxes, such as value-added taxes, capital tax, sales and use and property taxes, which are discussed in Note 11.

Prior to and during the third quarter, the most significant income tax disputes in which the Company was involved related to various income tax assessments imposed by the Spanish tax authorities against the Company’s Spanish subsidiaries. As a result of tax audits for the 2002-2003 and the 2004-2006 fiscal years, the Spanish tax authorities had challenged certain tax positions taken in the Spanish subsidiaries’ tax returns and imposed assessments of Euro 22.0 million ($28.3 million) including estimated interest through September 30, 2012 and Euro 62.8 million ($78.3 million), including interest, prior to the August 1, 2012 settlement as discussed below. In addition, as the challenged income tax positions had also been taken by the Spanish subsidiaries for the 2007-2011 fiscal years, the Company was subject to similar challenges for those subsequent periods.

On August 1, 2012, the Company reached an overall settlement with the Spanish tax authorities regarding the income tax deductions taken by its Spanish subsidiaries for the 2004-2010 years. Pursuant to the settlement, the Company and the Spanish tax authorities agreed to settle all disputes and claims arising from the Company’s Spanish subsidiaries’ income tax returns for the 2004-2010 fiscal years in exchange for an agreed-upon payment of Euro 86.0 million ($105.7 million), in the aggregate. During the third quarter, the Company made payments totaling Euro 84.0 million ($105.5 million based exchange rates at the respective payment dates), pursuant to the settlement. The Company expects to pay the remaining amounts in the fourth quarter of 2012. As part of the overall settlement, the Company and the Spanish tax authorities also preliminarily agreed upon the key principles to be incorporated into a multi-year agreement that will establish the tax basis for the Company’s activities in Spain beginning in 2012. The terms and conditions of the proposed agreement, which are expected to be finalized in the fourth quarter of 2012, are not expected to have a material impact on the Company’s effective tax rate for the 2012 fiscal year.

The settlement agreement did not address the income tax returns filed for the 2002-2003 fiscal years, as these were further along in the Spanish judicial process, and the Company intends to continue to challenge these assessments. In addition, the settlement agreement did not address the 2011 fiscal year, as the Spanish subsidiaries’ 2011 tax return was not filed until late July 2012. Based on the tax settlement, the Company increased its liabilities for uncertain tax positions for years not settled.

Based on the tax settlement, the Company recorded an after-tax charge in the third quarter of 2012 of $72.4 million, which included $56.0 million related to the tax settlement of the 2004-2010 period and the increased liabilities for uncertain tax positions of $16.4 million for years not settled.

In order to proceed with its appeals of the tax assessments for the 2002-2003 fiscal years and the 2004-2006 fiscal years, the Company was required to post bank guarantees. As of September 30, 2012, the Company had posted bank guarantees of Euro 21.6 million ($27.8 million) associated with the 2002-2003 appeals. As a result of the settlement payments made during the third quarter 2012, the Company reduced, during the period, the amount of outstanding bank guarantees related to the 2004-2006 fiscal years by Euro 60.1 million ($77.4 million) and expects to reduce its bank guarantees by an additional Euro 1.5 million ($1.9 million) upon payment of the final amounts due pursuant to the tax settlement.

In addition to the above, the Company has also been a party to four dividend withholding tax controversies in Spain in which the Spanish tax authorities alleged that the Company’s Spanish subsidiaries underpaid withholding taxes during the 1995-2001 fiscal years. The Company had previously appealed each of these controversies. At September 30, 2012, the aggregate amount of these dividend withholding controversies was Euro 18.7 million ($24.0 million), including estimated interest, for which the Company is fully reserved. During the first nine months of 2012, the Company received unfavorable decisions on the first three cases and recorded charges (including estimated interest) aggregating $14.3 million ($12.4 million after-tax), of which $8.4 million is reflected in income taxes payable at September 30, 2012. The Company made total payments of $10.6 million during the nine months ended September 30, 2012, and expects to make an additional $2.1 million payment by the end of 2012. As of September 30, 2012, the Company had posted remaining bank guarantees of Euro 9.6 million ($12.3 million) in order to proceed with these appeals. The fourth and final remaining appeal has not yet been heard by the Spanish Supreme Court. As of September 30, 2012, the Company’s liability for uncertain tax positions arising from the Spanish withholding tax controversies was $3.6 million in the aggregate.

As of September 30, 2012, the Company’s aggregate provisions for uncertain tax positions, including interest and penalties, is $46.4 million, which includes $23.3 million associated with the tax deductions taken by our Spanish subsidiaries, $3.6 million associated with our Spanish dividend withholding tax controversies and the remainder associated with various other tax positions asserted in foreign jurisdictions, none of which is individually material.

In addition, the Company has several other tax audits in process and has open tax years with various taxing jurisdictions that range primarily from 2002 to 2011. Based on currently available information, we do not believe the ultimate outcome of any of these tax audits and other tax positions related to open tax years, when finalized, will have a material impact on our financial position, reported results or liquidity.

The effective tax rate for the three months ended September 30, 2012 was 86.6% (substantially driven by the Spanish tax settlement) compared with 26.9% for the three months ended September 30, 2011. The effective tax rate for 2012 third quarter includes a $72.4 million charge based on the overall Spanish tax settlement as discussed above. In addition, as part of the overall settlement, the Company and the Spanish tax authorities have also preliminarily agreed upon the key principles to be incorporated into an agreement that will establish the tax basis for the Company’s activities in Spain for 2012 and future years and accordingly, in the third quarter of 2012 the Company recorded an adjustment of $2.6 million to increase accrued income taxes. The period-over-period increase also reflects the absence of an R&D tax credit in the U.S. during the third quarter of 2012 as compared to the 2011 period.

The effective tax rate for the nine months ended September 30, 2012 was 47.6% (substantially driven by the Spanish tax settlement) compared with 27.2% for the nine months ended September 30, 2011. The effective tax rate for the 2012 nine month period includes a $72.4 million charge based on the overall Spanish tax settlement comprised as discussed above. The nine month period ended September 30, 2012 also includes a $10.6 million benefit due to a corporate restructuring charge of certain of our foreign subsidiaries that was offset by $14.3 million of provisions related to the Spanish dividend withholding tax cases and other reserve adjustments on uncertain tax positions. The 2011 period included a $5.8 million write-off of deferred tax assets as a result of U.S. state law changes enacted during the third quarter of 2011 that was partially offset by several items, including approximately $3.0 million related to adjustments on uncertain tax positions and a favorable mix in earnings and remittances.