Note 18: Income Taxes

The elements of the provision (benefit) for income taxes were as follows:

		(In millions)			(In millions)			(In millions)
	Year Ended December 31,
	2011			2010			2009
	(In millions)
Income (loss) before income tax:
U.S.	$	27.9		$	(50.6	)	$	(106.7	)
Foreign		(4.8	)		(6.5	)		(18.8	)

	$	23.1		$	(57.1	)	$	(125.5	)

Current income taxes:
Federal	$	(5.2	)	$	(47.2	)	$	3.4
Foreign		5.9			1.5			7.5
State		0.5			0.4			(0.2	)

		1.2			(45.3	)		10.7
Deferred income taxes		(12.7	)		58.2			56.2

Total tax provision (benefit)	$	(11.5	)	$	12.9		$	66.9

Income taxes differ from the amounts computed by applying the federal tax rate as follows:


	Year Ended December 31,
	2011			2010			2009
	(In millions)
Federal income tax expense (benefit) computed at statutory tax rate of 35%	$	8.1		$	(20.0	)	$	(44.0	)
Additional taxes or credits from:
State and local income taxes, net of federal income tax effect		4.5			(0.4	)		(1.3	)
Foreign tax credit		—			—			(8.5	)
Non-deductible expenses and non-taxable income		(1.1	)		0.7			1.5
Domestic production activities		—			2.1			(1.3	)
Foreign income not includable in federal taxable income		6.3			5.5			5.8
Indian taxes		—			—			8.3
Tax on sale of foreign joint venture		—			—			14.5
Valuation allowance (reversals)		(30.1	)		24.5			92.3
All other, net		(0.8	)		0.5			(0.4	)

Total income tax provision (benefit)	$	(11.5	)	$	12.9		$	66.9

The components of the deferred income tax assets and liabilities arising under FASB ASC 740, "Income Taxes" ("ASC 740") were as follows:


	At December 31,
	2011			2010
	(In millions)
Deferred tax assets:
AMT tax credit carryforwards	$	30		$	38
Post-retirement benefits other than pensions		54			67
Federal and foreign net operating loss carryforwards		35			29
State net operating loss carryforwards		9			12
Pension liability		139			120
Other deductible temporary differences		23			21
Less: valuation allowances		(121	)		(125	)

	$	169		$	162

Deferred tax liabilities:
Fixed asset basis difference	$	116		$	117
Inventory basis difference		131			135
Other intangibles		19			1

		266			253

Net deferred tax liability	$	(97	)	$	(91	)

The Company had available at December 31, 2011, federal AMT credit carryforwards of approximately $30 million, which may be used indefinitely to reduce regular federal income taxes.

The Company's deferred tax assets also include $31 million related to US federal net operating loss ("NOL") carryforwards which expire in 20 years, $9 million related to state NOL carryforwards which expire generally in 3 to 15 years and $4 million related to foreign NOL carryforwards which expire in 3 to 5 years, available at December 31, 2011.

Earnings from the Company's foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. Federal and state income taxes or foreign withholding tax has been made in our Consolidated Financial Statements. A distribution of these non-U.S. earnings in the form of dividends or otherwise would subject the Company to both U.S. Federal and state income taxes, as adjusted for tax credits and foreign withholding taxes. A determination of the amount of any unrecognized deferred income tax liability on the undistributed earnings is not practicable. At December 31, 2011, the Company had approximately $50.4 million of undistributed foreign earnings. The Company has not recognized any U.S. tax expense on $41.9 million of these earnings since it intends to reinvest the earnings outside the U.S. for the foreseeable future.

The Company's foreign subsidiaries in Canada and China held approximately $43 million in cash and short term investments at the end of 2011 that, if repatriated, would cause the Company to accrue additional US income taxes. The Company does not intend to repatriate these funds.

The Company accounts for uncertain income tax positions in accordance with ASC 740. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	Unrecognized Tax Benefits
	(In millions)
Unrecognized tax benefits balance at January 1, 2009	$	5.1
Gross increases – tax positions in prior periods		0.1
Settlements and closing of statute of limitations		(0.2	)

Unrecognized tax benefits balance at December 31, 2009	$	5.0
Gross increases – tax positions in prior periods		1.0
Settlements and closing of statute of limitations		(0.2	)

Unrecognized tax benefits balance at December 31, 2010	$	5.8
Gross increases – tax positions in prior periods		1.1
Settlements and closing of statute of limitations		(0.9	)

Unrecognized tax benefits balance at December 31, 2011	$	6.0

Ryerson and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has substantially concluded all U.S. federal income tax matters for years through 2009. Substantially all state and local income tax matters have been concluded through 2006. However, a change by a state in subsequent years would result in an insignificant change to the Company's state tax liability. The Company has substantially concluded foreign income tax matters through 2006 for all significant foreign jurisdictions.

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2011 and 2010, we had approximately $0.5 million and $0.4 million of accrued interest related to uncertain tax positions, respectively. Total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $2.8 million and $2.2 million as of December 31, 2011 and 2010, respectively. Although a larger portion of the unrecognized tax benefit may affect the effective tax rate, currently, the benefit would be in the form of a deferred tax asset fully offset by a valuation allowance.

The Company and its U.S. subsidiaries are included in the consolidated federal income tax return with its parent company, Ryerson Holding. Income taxes have been computed as if the Company filed a separate income tax return.