Income Taxes and Uncertain Tax Positions

6 Months Ended

Jun. 30, 2013

Income Tax Expense Benefit [Abstract]

Income Tax Disclosure [Text Block]

Note 3 – Income Taxes and Uncertain Income Tax Positions

The Company's effective tax rate for the first six months of 2013of 28.3% was higher than the first six months of 2012effective tax rate of 26.1%. Both 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 $0.10 and $0.12 per diluted share for the six months ended June 30, 2013 and June 30, 2012, respectively. Also contributing to the increase in the effective tax rate is that the tax rate in China was 15% in the first six months of 2012 compared to 25% in the first six months of 2013. While the Company's recertification of its Chinese subsidiary's high tech status is pending, the Company will record tax expense at the current statutory rate of 25%.

As of June 30, 2013, the Company's cumulative liability for gross unrecognized tax benefits was $11,822. 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 $144 and $(333) for interest and $148and $241 for penalties on its Condensed Consolidated Statement of Income for thethree and six months endedJune 30, 2013, respectively, and recognized $164 and $(51) for interest and $99 and $194 for penalties on its Condensed Consolidated Statement of Income for the three and six months endedJune 30, 2012, respectively. As of June 30, 2013, the Company had accrued $1,931for cumulative interest and $1,848 for cumulative penaltiescompared to $2,288 for cumulative interest and $1,630 for cumulative penalties at December 31, 2012.

During the three months ended June 30, 2013, the Company recognized a decrease in its cumulative liability for gross unrecognized tax benefitsof approximately $8 due to the expiration of the applicable statutes of limitations for certain tax years. During the three months ended June 30, 2012, there were no expirations of statutes of limitations for uncertain tax positions.

During the six months ended June 30, 2013, the Company recognized a $1,695 decrease in its cumulative liability for gross unrecognized tax benefits due to the expiration of the applicable statutes of limitations for certain tax years. During the six months ended June 30, 2012, the Company recognized a $1,072 decrease in its cumulative liability for gross unrecognized tax benefits due to the expiration 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 with regard to certain tax positions. 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 Kingdomfrom 2007, Brazil and Spain from 2008, the United States from 2009, China andItaly 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. On June 24, 2013, a hearing was held before the Provincial Tax Court of Varese, Italy. The Company and outside counsel believe the Company should prevail on the merits of its case. The Company does not believe it has any exposures warranting an uncertain tax position reserve as of June 30, 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 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.