Income Taxes and Uncertain Tax Positions

3 Months Ended

Mar. 31, 2013

Income Tax Expense Benefit [Abstract]

Income Tax Disclosure [Text Block]

Note 3 – Income Taxes and Uncertain Income Tax Positions

The Company's first quarter of 2013 effective tax rate was24.1%, as compared to an effective tax rate of 21.5% for the first quarter of 2012. Both quarters' effective tax rates reflect decreases in reserves for uncertain tax positions due to the expiration of applicable statutes of limitations for certain tax years of approximately $0.10and $0.12per diluted share for the three months ended March 31, 2013 and March 31, 2012, respectively. Also, contributing to the difference in the effective tax rate is that the tax rate in China was 15% in 2012 compared to 25% in the first quarter of 2013.  While the Company's re-certification of its Chinese subsidiary as a high tech enterprise is pending, the Company will record tax expense at the statutory rate of 25%.

As of March 31, 2013, the Company's cumulative liability for gross unrecognized tax benefits was $10,924. At December 31, 2012, the Company's cumulative liability for gross unrecognized tax benefits was $12,410.

The Company continues to recognize interest and penalties associated with uncertain tax positions as a component of taxes on income before equity in net income of associated companies in its Condensed Consolidated Statement of Income. The Company recognized ($477) for interest and $93 for penalties on its Condensed Consolidated Statement of Income for the three months endedMarch 31, 2013, and ($215) for interest and $95 for penalties on its Condensed Consolidated Statement of Income during the three months endedMarch 31, 2012. As of March 31, 2013, the Company had accrued $1,764for cumulative interest and $1,677 for cumulative penalties, compared to$2,288 for cumulative interest and $1,630 for cumulative penalties accrued at December 31, 2012.

During the three months endedMarch 31, 2013 and March 31, 2012, the Company recognized decreases of approximately $1,687 and $1,072, respectively, in its cumulative liability for gross unrecognized tax benefits due to the expriation of the applicable statutes of limitations for certain tax years.

The Company estimates that during the year endingDecember 31, 2013 it will reduce its cumulative liability for gross unrecognized tax benefits by approximately $2,400 to $2,500 due to the expiration of the statute of limitations for certain tax years. This estimated reduction in the cumulative liability for unrecognized tax benefits does not consider any increase in liability for unrecognized tax benefits with regard to existing tax positions or any increase in cumulative liability for unrecognized tax benefits with regard to new tax positions for the year endingDecember 31, 2013.

The Company and its subsidiaries are subject to U.S. Federal income tax, as well as the income tax of various state and foreign tax jurisdictions. Tax years that remain subject to examination by major tax jurisdictions include the Netherlandsand the United Kingdom from 2007, Brazil and Spain from 2008, the United States from 2009, Chinaand Italy from 2010, and various domestic state tax jurisdictions from 1993.

In the first quarter of 2013, the Internal Revenue Service (“IRS”) initiated a limited scope audit of the Company's 2010 Federal Income Tax Return. By letter dated March 25, 2013, the IRS notified the Company that it had completed the review of the Company's 2010 Federal Income Tax Return without any changes to the reported tax.

During the second quarter of 2012, the Italian tax authorities initiated a transfer pricing audit of the Company's Italian subsidiary. On July 7, 2012, the Company received a preliminary tax report related to this transfer pricing audit, which proposed several adjustments to the taxable income of the subsidiary. During the fourth quarter of 2012, the Company's Italian subsidiary received an assessment for the tax year 2007, which the Company appealed during the first quarter of 2013. In conjunction with outside counsel, the Company reviewed the report and believes it should prevail on its merits. The Company does not believe it has any exposures warranting an uncertain tax position reserve as of March 31, 2013.

At the end of March 2013, the Chinese tax authorities announced they would be reviewing the original applications of all companies that were certified as high tech enterprises in Shanghai. If the tax authorities find significant issues with the application, they could disallow the benefits of high tech enterprise status retroactively. The Company currently understands that a retroactive disallowance of the high tech enterprise status would affect only 2012. Currently, no appointment with the tax auditor has been scheduled. The Company does not believe that its status as a high tech enterprise will be revoked and as a result no uncertain tax position has been recorded.