Income Tax Expense

3 Months Ended

Mar. 31, 2013

Income Tax Expense [Abstract]

Income Tax Expense

NOTE 10.  INCOME TAX EXPENSE

	Three Months Ended
	March 31,
	2013	2012
Earnings from continuing operations before income taxes	$ 15.1	$ 32.3
Income tax expense	11.9	13.3
Effective tax rate	78.8%	41.2%

The effective tax rate for the first quarter of 2013 was higher than the comparable period of 2012, primarily due to the provision of valuation allowances reducing deferred tax assets generated in the quarter related to increased losses of certain foreign affiliates.  In certain foreign jurisdictions, we are in a net operating loss carryforward position and the related deferred tax assets are subject to a full valuation allowance.  Therefore, any pretax losses in those jurisdictions do not generate a corresponding income tax benefit.

Deferred income tax assets and liabilities are recognized by applying enacted tax rates to temporary differences that exist as of the balance sheet date.  We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more likely than not standard, we give appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability and foreign source income, the duration of statutory carryforward periods, and our experience with operating loss and tax credit carryforward expirations. A history of cumulative losses is a significant piece of negative evidence used in our assessment. If a history of cumulative losses was incurred for a tax jurisdiction, forecasts of future profitability are not used as positive evidence related to the realization of the deferred tax assets in our assessment. Specifically with respect to the foreign net operating losses generated in the quarter, we considered the history of cumulative losses in assessing the need for a valuation allowance.

We do not expect to record any material changes during 2013 to unrecognized tax benefits that were claimed on tax returns covering tax years ending on or before December 31, 2012. 

As of March 31, 2013, we consider foreign unremitted earnings to be permanently reinvested.