(9)	Income Taxes

Income/(loss) before income taxes consist of the following:

	December 31,
	2011		2010		2009

Domestic	$	3,749	$	1,199	$	(1,272	)
International		16,188		13,775		23,917
Total	$	19,937	$	14,974	$	22,645

The provision for income taxes consist of the following provisions/(benefits):

	December 31,
	2011			2010			2009
Current:
Federal	$	(196	)	$	(3	)	$	(240	)
State		45			55			86
International		7,074			6,778			12,694
		6,923			6,830			12,540
Deferred:
Federal	$	204		$	204		$	204
International		(925	)		(1,369	)		(491	)
		(721	)		(1,165	)		(287	)
Total	$	6,202		$	5,665		$	12,253

The provision for income taxes differs from the statutory federal income tax rate of 35% for 2011, 2010 and 2009 as follows:

	December 31,
	2011			2010			2009

Income tax provision at U.S federal statutory rate	$	6,978		$	5,241		$	7,926
State and local taxes, net of federal income tax benefits		14			17			30
Effect of foreign income taxed at rates other than the U.S. federal statutory rate		469			610			(962	)
Foreign income inclusions		8,398			13,869			-
Tax credits		(9,404	)		(12,447	)		(135	)
Indefinite-lived intangibles		204			204			204
Adjustments for prior years' taxes		242			(86	)		5,006
Net change in valuation allowance		(338	)		(1,799	)		103
Other		(361	)		56			81
Total	$	6,202		$	5,665		$	12,253

Foreign income inclusions represent distributions from foreign subsidiaries which gave rise to newly recognized foreign tax credits. The Company utilized fully valued foreign tax credits in 2011, and fully valued net operating loss (“NOL”) carryforwards and foreign tax credits in 2010, to completely offset any tax impact of the foreign income inclusions.

The components of deferred tax assets and liabilities as of December 31, 2011 and 2010 relate to temporary differences and carryforwards as follows:

	December 31,
	2011			2010
Current deferred tax assets:
Inventory	$	2,281		$	2,569
Legal and related reserves		508			512
Other		120			179
Current deferred tax assets		2,909			3,260
Valuation allowances		(1,991	)		(2,633	)
Total current deferred tax assets	$	918		$	627

Current deferred tax liabilities:
Other	$	856		$	486
Total current deferred tax liabilities	$	856		$	486

	December 31,
	2011			2010
Non-current deferred tax assets:
Foreign tax credit carryforwards	$	50,936		$	54,598
Environmental		1,549			1,854
Net capital loss carryforwards (domestic)		15			15
Net operating loss carryforwards (foreign)		996			1,544
Employee benefits		17,138			13,711
Restructuring		18			167
Research & experimentation tax credit carryforwards		1,630			1,214
Alternative minimum tax credit carryforwards		3,070			3,266
Property, plant and equipment		3,498			2,574
Other		3,817			2,526
Non-current deferred tax assets		82,667			81,469
Valuation allowances		(75,580	)		(75,216	)
Total non-current deferred tax assets		7,087			6,253

Non-current deferred tax liabilities:
Property, plant and equipment		7,960			8,025
Intangibles		9,209			9,315
Indefinite-lived intangibles		2,349			2,144
Foreign tax allocation reserve		3,812			4,662
Total non-current deferred tax liabilities	$	23,330		$	24,146
Total net non-current deferred tax liabilities	$	16,243		$	17,893

The Company establishes a valuation allowance against deferred tax assets when it is more likely than not that the Company will be unable to realize those deferred tax assets in the future. Based on the Company's history of earnings it has established a valuation allowance of $76,569 against its net domestic deferred tax assets, excluding deferred tax liabilities on indefinite-lived intangibles, as of December 31, 2011. With respect to the Company's foreign deferred tax assets, the Company recorded a valuation allowance of $1,002 as of December 31, 2011.

The Company expects to maintain a full valuation allowance against its net domestic, and certain foreign, deferred tax assets, subject to the consideration of all prudent and feasible tax planning strategies, until such time as the Company attains an appropriate level of future domestic profitability and the Company is able to conclude that it is more likely than not that its domestic deferred tax assets are realizable.

The domestic valuation allowance for the years ended December 31, 2011, 2010 and 2009 increased $304, decreased $3,891, and increased $1,168, respectively. The 2011 increase in the domestic valuation allowance was allocated as follows: The valuation allowance decreased $132 for domestic income in continuing operations and increased by a net amount of $436 for deferred tax amounts, domestic gains and losses included in OCI and discontinued operations. The 2010 decrease in the domestic valuation allowance was allocated as follows: The valuation allowance decreased $1,874 for domestic income in continuing operations and decreased by a net amount of $2,017 for deferred tax amounts, domestic gains and losses included in OCI and discontinued operations. The 2009 increase in the domestic valuation allowance was allocated as follows: The valuation allowance increased $130 for domestic losses and increased by a net amount of $1,038 for deferred tax amounts and domestic gains and losses included in OCI.

The foreign valuation allowance for the years ended December 31, 2011, 2010 and 2009 decreased $582, increased $1,372, and decreased $30, respectively. The 2011 decrease in the foreign valuation allowance was allocated as follows: The valuation allowance decreased $206 for foreign income and decreased $376 for deferred tax amounts and currency translation adjustments included in OCI. The 2010 increase in the foreign valuation allowance was allocated as follows: The valuation allowance increased $75 for foreign losses and increased $1,297 for deferred tax amounts and currency translation adjustments included in OCI. The 2009 decrease in the foreign valuation allowance was allocated as follows: The valuation allowance decreased $27 for foreign income and decreased $3 for deferred tax amounts and currency translation adjustments included in OCI.

Under the tax laws of the various jurisdictions in which the Company operates, NOLs may be carried forward or back, subject to statutory limitations, to reduce taxable income in future or prior years. The domestic federal NOLs and most of the domestic state NOLs were fully utilized during 2010. The foreign NOLs were approximately $3,245, of which $2,905 are attributable to NOLs acquired during 2010. NOLs in most foreign jurisdictions will carry forward indefinitely.

As of December 31, 2011, $50,936 of domestic federal foreign tax credits, $1,630 of research & experimentation tax credits and $3,070 of alternative minimum tax credits were available as credits against future U.S. income taxes on worldwide income, subject to certain limitations. Under the U.S. Internal Revenue Code, these will expire in 2012 through 2021, 2020 through 2031, and the alternative minimum tax credit carryforwards have no expiration date, respectively. All domestic tax credits are offset by a full valuation allowance.

In 2011 and 2010, the Company repatriated $25,332 and $31,306, respectively, of cash from its foreign subsidiaries to reduce its credit and currency exposure for cash held at foreign banks by utilizing the excess cash for debt reduction, and also to make foreign acquisitions during 2010. The Company utilized fully valued foreign tax credits in 2011, and fully valued NOLs and foreign tax credits in 2010, to completely offset any tax impact of the foreign inclusions. At this time, the Company intends to reinvest foreign earnings indefinitely outside of the U.S. and would only consider further repatriations of cash from foreign subsidiaries if it could utilize fully valued domestic tax attributes to completely offset any tax expense that would otherwise result. Unrecognized foreign tax credits and fully valued foreign tax credit carryovers would be available to offset any potential U.S. tax liability. Therefore, the Company has not provided U.S. federal income taxes or foreign withholding taxes on its undistributed earnings from foreign operations as of December 31, 2011. Determination of the amount of unrecognized deferred taxes related to these earnings is not practicable because of the complexities of the hypothetical calculation.

The following table summarizes the activity related to the Company's unrecognized tax benefits as of December 31, 2011, 2010 and 2009:

	2011			2010			2009

Balance at January 1	$	4,085		$	4,598		$	1,697
Gross increases related to current period tax positions		317			236			133
Gross increases/(decreases) related to prior period tax positions		95			(303	)		2,881
Expirations of statute of limitations for the assessment of taxes		(38	)		(161	)		(193	)
Foreign currency translation		(131	)		(285	)		80
Balance at December 31	$	4,328		$	4,085		$	4,598

Of the total balance of unrecognized tax benefits at December 31, 2011, $3,902, if recognized, would affect the effective tax rate.

Gross interest and penalties at December 31, 2011, 2010 and 2009 of $3,427, $3,160 and $2,795, respectively, related to the above unrecognized tax benefits are not reflected in the table above. In 2011, 2010 and 2009, the Company accrued $328, $343 and $2,529, respectively, of interest and penalties in the income statement. Consistent with prior periods, the Company recognizes interest and penalties within its income tax provision.

Tax years 2007 and forward in the U.S. are open to examination by the IRS. The Company is also subject to examinations in its non-U.S. jurisdictions for 2006 and later years.

The Company is also subject to audits in various states for various years in which it has filed income tax returns. Previous state audits have resulted in immaterial adjustments. In the majority of states where the Company files, the Company is subject to examination for tax years 2007 and forward.

In 2009, a subsidiary of the Company was examined by a European tax authority, who challenged the business purpose of the deductibility of certain intercompany transactions from 2003. In the fourth quarter of 2009, the tax authorities notified the Company that they disagreed with the Company's responses to the authority's two formal assessments. In the first quarter of 2010, the Company filed an appeal to litigate the matter. The first court date related to this matter was held in June 2011. The court issued its ruling in favor of the Company in June, however, this ruling has been appealed by the tax authorities and only applies to the smaller of the two assessments made by the authorities related to this matter. The Company still believes this dispute to be in the early stages of the judicial process since any ruling reached by any of the courts may be appealed, and as such the final date of resolution and outcome of this matter are uncertain at this time. However, within the next twelve months it is possible that factors such as new developments, judgments or settlements may require the Company to increase its reserve for unrecognized tax benefits by up to $8,000 or decrease its reserve by $5,300, including interest and penalties. If the court rules against the Company in subsequent court proceedings, a payment of between $6,000 and $9,000 including interest and penalties will be due immediately while the case is appealed. The Company has analyzed these issues in accordance with guidance on uncertain tax positions and believes at this time that its reserves are adequate, and intends to vigorously defend itself. In January 2012 the tax authorities commenced a general examination of the subsidiary's 2008 tax return. No issues have been raised to date.

In the next twelve months, other than as noted above, the Company may increase its reserve for unrecognized tax benefits for intercompany transactions and acquired tax attributes by approximately $450. This could affect the effective tax rate.