Note 7. Income Taxes

Income from operations before provision for taxes by domestic and foreign source is as follows:

	2014		2013		2012
	(millions of dollars)
Income from continuing operations before income taxes and income from affiliates and joint ventures:
Domestic	$	54.8	$	66.6	$	56.9
Foreign		68.2		57.1		53.7
	$	123.0	$	123.7	$	110.6

The provision (benefit) for taxes on income consists of the following:

	2014			2013		2012
	(millions of dollars)
Domestic
Taxes currently payable
Federal	$	28.1		$	13.7	$	14.9
State and local		3.4			2.6		1.3
Deferred income taxes		(15.1	)		2.5		3.2
Domestic tax provision		16.4			18.8		19.4

Foreign
Taxes currently payable		20.3			13.8		14.3
Deferred income taxes		(5.9	)		1.9		(1.8	)
Foreign tax provision		14.4			15.7		12.5
Total tax provision	$	30.8		$	34.5	$	31.9

The provision for taxes on income shown in the previous table is classified based on the location of the taxing authority, regardless of the location in which the taxable income is generated.

The major elements contributing to the difference between the U.S. federal statutory tax rate and the consolidated effective tax rate are as follows:

	2014			2013			2012

U.S. statutory rate		35.0	%		35.0	%		35.0	%

Depletion		-7.8	%		-3.6	%		-3.8	%
Difference between tax provided on foreign earnings and the U.S. statutory rate		-9.5	%		-3.6	%		-4.0	%
State and local taxes, net of federal tax benefit		1.0	%		1.7	%		1.5	%
Tax credits and foreign dividends		4.1	%		-1.7	%		-0.1	%
Change in valuation allowance		1.7	%		0.3	%		-1.1	%
Impact of uncertain tax positions		0.4	%		-0.6	%		0.9	%
Impact of officer's non-deductible compensation		2.7	%		2.3	%		2.1	%
Manufacturing deduction		-3.3	%		-0.9	%		-0.8	%
Other		0.7	%		-1.0	%		-0.9	%
Consolidated effective tax rate		25.0	%		27.9	%		28.8	%

The Company believes that its accrued liabilities are sufficient to cover its U.S. and foreign tax contingencies. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

	2014			2013
	(millions of dollars)
Deferred tax assets attributable to:
Accrued liabilities	$	39.9		$	9.4
Net operating loss carry forwards		25.6			9.6
Pension and post-retirement benefits costs		57.1			21.6
Other		18.9			14.3
Valuation allowance		(21.7	)		(5.9	)
Total deferred tax assets		119.8			49.0
Deferred tax liabilities attributable to:
Plant and equipment, principally due to differences in depreciation		264.3			14.3
Intangible assets		89.3			13.3
Other		5.4			1.6
Total deferred tax liabilities		359.0			29.2
Net deferred tax asset (liability)	$	(239.2	)	$	19.8

The current and long-term portion of net deferred tax assets is as follows:

	2014			2013
	(millions of dollars)

Net deferred tax asset (liability), current	$	19.6		$	4.0
Net deferred tax asset (liability), long-term		(258.8	)		15.8
	$	(239.2	)	$	19.8

The current portion of the net deferred tax assets is included in prepaid expenses and other current assets. The long-term portion of the net deferred tax assets are included in other assets and deferred charges.

In connection with the acquisition, the Company recorded an additional deferred tax liability of $322.3 million with a corresponding increase to goodwill. The increase in deferred tax liability represents the tax effect of the difference between the estimated assigned fair value of the tangible and intangible assets and the tax basis of such assets.

The Company has $15.3 million of deferred tax assets arising from tax loss carry forwards which will be realized through future operations. Carry forwards of approximately $3.3 million expire over the next 20 years, and $12.0 million can be utilized over an indefinite period.

On December 31, 2014, the Company had $5.0 million of total unrecognized tax benefits. Included in this amount were a total of $2.5 million of unrecognized income tax benefits that, if recognized, would affect the Company's effective tax rate. While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, we do not expect the change to have a significant impact on the results of operations or the financial position of the Company.

The following table summarizes the activity related to our unrecognized tax benefits:

	2014			2013
	(millions of dollars)

Balance at beginning of the year	$	3.9		$	4.8
Increases related to current year tax positions		0.6			0.6
Increases related to new judgements		1.0			-
Decreases related to audit settlements and statue expirations		(0.5	)		(1.5	)
Balance at the end of the year	$	5.0		$	3.9

The Company's accounting policy is to recognize interest and penalties accrued, relating to unrecognized income tax benefits as part of its provision for income taxes. The Company had recorded $0.7 million of interest and penalties during 2014 and had a total accrued balance on December 31, 2014 of $1.3 million.

The Company operates in multiple taxing jurisdictions, both within and outside the U.S. In certain situations, a taxing authority may challenge positions that the Company has adopted in its income tax filings. The Company, with a few exceptions (none of which are material), is no longer subject to U.S. federal, state, local, and European income tax examinations by tax authorities for years prior to 2006.

Net cash paid for income taxes were $5.7 million, $25.5 million and $21.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company has not provided for U.S. federal and foreign withholding taxes on $515.4 million of foreign subsidiaries' undistributed earnings as of December 31, 2014 because such earnings are intended to be permanently reinvested overseas. To the extent the parent company has received foreign earnings as dividends; the foreign taxes paid on those earnings have generated tax credits, which have substantially offset related U.S. income taxes. However, in the event that the entire $515.4 million of foreign earnings were to be repatriated, incremental taxes may be incurred. We do not believe this amount would be more than $97.0 million.