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Income Taxes and Uncertain Tax Positions
9 Months Ended
Sep. 30, 2013
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

Note 6 – Income Taxes and Uncertain Income Tax Positions

The Company's effective tax rate for the first nine months of 2013 of 30.0% was higher than the first nine months of 2012 effective tax rate of 26.9%. 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 $0.13 and $0.15 per diluted share for the nine months ended September 30, 2013 and September 30, 2012, respectively. Also, contributing to the higher effective tax rate was an increase in an Asia Pacific subsidiary's effective tax rate from 15%, in 2012, to 25%, in 2013, which is further discussed below.

As of September 30, 2013, the Company's cumulative liability for gross unrecognized tax benefits was $12,352. 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 $39 and $(294) for interest and $101 and $342 for penalties on its Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2013, respectively, and recognized $57 and $6 for interest and $70 and $264 for penalties on its Condensed Consolidated Statement of Income for the three and nine months ended September 30, 2012, respectively. As of September 30, 2013, the Company had accrued $2,036 for cumulative interest and $2,015 for cumulative penalties compared to $2,288 for cumulative interest and $1,630 for cumulative penalties at December 31, 2012.

During the three months ended September 30, 2013, the Company recognized a decrease in its cumulative liability for gross unrecognized tax benefits of approximately $472 due to the expiration of the applicable statutes of limitations for certain tax years. During the three months ended September 30, 2012, the Company recognized a decrease in its cumulative liability for gross unrecognized tax benefits of approximately $426 due to the expiration of the applicable statutes of limitations for certain tax years.

During the nine months ended September 30, 2013, the Company recognized a $2,167 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 nine months ended September 30, 2012, the Company recognized a $1,498 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 ending December 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 ending December 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 Netherlands and the United Kingdom from 2007, Brazil from 2008, Spain from 2009, the United States, China and 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. On June 24, 2013, a hearing was held before the Provincial Tax Court of Varese, Italy. On September 16, 2013, the Provincial Tax Court of Varese delivered a decision confirming the Italian tax authorities' proposed adjustment to the taxable income of the subsidiary, but denying the proposed assessment of penalties. The Company will appeal the decision of the Provincial Tax Court to the Regional Tax Court. 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 September 30, 2013.

In March of 2013, certain tax authorities in Asia Pacific announced they would review the original applications of all companies that received a certain concessionary tax rate.  If the tax authorities had found issues with the application, they could disallow the benefits of such tax rate retroactively.  The Company currently understands that a retroactive disallowance of this concessionary tax rate would affect only 2012.  Currently, no appointment with the tax auditor has been scheduled. The Company does not believe that its past status is at risk and, as a result, no uncertain tax position has been recorded.

In June 2013, a subsidiary in the Company's Asia Pacific region applied for recertification of a prior concessionary tax rate with its respective tax authorities, which would renew the subsidiary's tax rate at 15% compared to its statutory tax rate of 25%. In September 2013, the Company's subsidiary was listed as one of the companies which received approval for the tax rate by its government's respective administrating agency for tax years 2013, 2014, and 2015. This publication marks the commencement of a 15 business day period of public notice and comment, which ended during October 2013. The Company recorded tax expense at the current statutory rate of 25% through the third quarter of 2013, as the Company's recertification of its concessionary tax rate remained contingent on receiving no adverse public comment during the comment period. If the Company had recognized the renewal of this tax rate in the third quarter of 2013, then the reduced effective tax rate would have yielded an estimated $0.08 per diluted share of additional earnings in the quarter. As of the filing of this Report on Form 10-Q, the period for comment has expired and the Company has not received a public notice or comment challenging the approval status. Assuming there are no other significant developments related to this event, the Company will recognize the change to its effective tax rate in its financial statements in the fourth quarter of 2013.