Income Taxes

Pretax income for 2013, 2012 and 2011 was taxed in the following jurisdictions:



	2013		2012		2011
	(In thousands)
Domestic	$	233,530	$	65,738	$	192,857
Foreign	119,599		20,466		81,024
Total	$	353,129	$	86,204	$	273,881

The provision (benefit) for income taxes for 2013, 2012 and 2011, was as follows:



	2013			2012			2011
	(In thousands)
Current
U.S.	$	59,707		$	59,811		$	48,823
State and local	8,123			5,764			3,434
Foreign	33,240			20,228			31,343
Total current	101,070			85,803			83,600
Deferred
U.S.	1,500			(31,246		)	4,792
State and local	(55		)	(2,377		)	(1,103		)
Foreign	(4,601		)	(3,606		)	(7,265		)
Total deferred	(3,156		)	(37,229		)	(3,576		)
Total provision for income taxes	$	97,914		$	48,574		$	80,024

Deferred tax assets (liabilities) at December 31, 2013 and 2012 were:



	2013			2012
	(In thousands)
Employee and retiree benefit plans	$	27,361		$	38,401
Depreciation and amortization	(175,894		)	(170,630		)
Inventories	9,627			10,851
Allowances and accruals	9,632			7,629
Interest rate exchange agreement	18,165			20,856
Other	4,636			7,059
Total	$	(106,473	)	$	(85,834	)

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2013 and 2012 were:



	2013			2012
	(In thousands)
Deferred tax asset — other current assets	$	34,151		$	32,293
Deferred tax asset — other noncurrent assets	4,284			3,222
Total deferred tax assets	38,435			35,515
Deferred tax liability — accrued expenses	—			—
Noncurrent deferred tax liability — deferred income taxes	(144,908		)	(121,349		)
Total deferred tax liabilities	(144,908		)	(121,349		)
Net deferred tax liabilities	$	(106,473	)	$	(85,834	)

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to pretax income. The computed amount and the differences for 2013, 2012 and 2011 are shown in the following table:



	2013			2012			2011
	(In thousands)
Pretax income	$	353,129		$	86,204		$	273,881
Provision for income taxes:
Computed amount at statutory rate of 35%	$	123,595		$	30,171		$	95,858
State and local income tax (net of federal tax benefit)	4,382			2,406			1,515
Taxes on non-U.S. earnings-net of foreign tax credits	(9,683		)	1,189			(4,522		)
Effect of flow-through entities	(7,267		)	(7,846		)	(6,922		)
Asset impairments	—			28,524			—
U.S. business tax credits	(1,516		)	—			(917		)
Domestic activities production deduction	(6,217		)	(5,267		)	(4,589		)
Other	(5,380		)	(603		)	(399		)
Total provision for income taxes	$	97,914		$	48,574		$	80,024

The Company has $597 million and $468 million of undistributed earnings of non-U.S. subsidiaries as of December 31, 2013 and 2012 , respectively. No deferred U.S. income taxes have been provided on these earnings as they are considered to be reinvested for an indefinite period of time or will be repatriated when it is tax effective to do so. If these amounts were distributed to the U.S., in the form of dividends or otherwise, we would be subject to additional U.S. income taxes, which could be material. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because of the complexities with the hypothetical calculation, and the amount of liability, if any, is dependent on circumstances if and when remittance occurs. During the year ended December 31, 2013, the Company repatriated $11.7 million of foreign earnings resulting in $0.9 million of incremental income tax expense.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2013, 2012 and 2011 are shown in the following table:



	2013			2012			2011
	(In thousands)
Beginning balance January 1st	$	6,506		$	5,548		$	6,440
Gross increases for tax positions of prior years	1,357			3,017			1,828
Gross decreases for tax positions of prior years	(99		)	(98		)	(1,595		)
Settlements	(1,219		)	—			(338		)
Lapse of statute of limitations	(1,421		)	(1,961		)	(787		)
Ending balance December 31st	$	5,124		$	6,506		$	5,548

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2013, 2012 and 2011, we had approximately $0.5 million, $0.7 million and $0.5 million, respectively, of accrued interest related to uncertain tax positions. As of December 31, 2013, 2012 and 2011, we had approximately $0.2 million, $0.5 million and $0.2 million, respectively, of accrued penalties related to uncertain tax positions.

The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $4.5 million, $5.8 million and $5.0 million as of December 31, 2013, 2012 and 2011, respectively. The tax years 2007-2012 remain open to examination by major taxing jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $1.2 million.

The Company had net operating loss and credit carry forwards for U.S. federal purposes at December 31, 2013 and 2012 of $9.4 and $13.9 million, respectively. For non-U.S. purposes, the Company had net operating loss carry forwards at December 31, 2013 and 2012 of $7.0 and $7.8 million, respectively. The federal net operating loss carry forwards are available for use against the Company’s consolidated federal taxable income and expire between 2018 and 2031. The entire balance of the non-U.S. net operating losses is available to be carried forward, with $2.7 million of these losses beginning to expire during the years 2018 through 2021. The remaining $4.3 million of such losses can be carried forward indefinitely.

At December 31, 2013 and 2012, the Company had a foreign capital loss carry forward of approximately $1.0 million and $1.0 million, respectively. The foreign capital loss can be carried forward indefinitely. At both December 31, 2013 and 2012, the Company has a valuation allowance against the deferred tax asset attributable to the foreign capital loss of $0.2 million. At December 31, 2013 and 2012, the Company had state net operating loss and credit carry forwards of approximately $22.4 million and $38.8 million, respectively. If unutilized, the state net operating loss will expire between 2020 and 2033. At December 31, 2013 and 2012, the Company recorded a valuation allowance against the deferred tax asset attributable to the state net operating loss of $0.7 million and $1.5 million, respectively.