NOTE 5 INCOME TAXES

Income before income taxes consists of:



Years Ended December 31,	2014		2013		2012

United States	$	31,681	$	28,968	$	58,250
International		254,620		235,415		183,123

Total	$	286,301	$	264,383	$	241,373

The provision (benefit) for income taxes is comprised of:

Years Ended December 31,	2014			2013			2012
Current:
U.S. Federal	$	14,023		$	7,174		$	17,027
State/Local		42			(631	)		491
International		99,585			79,070			70,450

	$	113,650		$	85,613		$	87,968

Deferred:
U.S. Federal/State	$	(10,130	)	$	9,575		$	8,757
International		(8,843	)		(2,731	)		(17,772	)

	$	(18,973	)	$	6,844		$	(9,015	)

Total	$	94,677		$	92,457		$	78,953

The difference between the actual income tax provision and the tax provision computed by applying the statutory federal income tax rate of 35.0% in 2014, 2013 and 2012 to income before income taxes is as follows:



Years Ended December 31,	2014			2013			2012

Income tax at statutory rate	$	100,205		$	92,534		$	84,481
State income taxes (benefits), net of federal benefit (tax)		770			(610	)		717
Provision for distribution of current foreign earnings		695			11,388			9,552
Rate differential on earnings of foreign operations		(5,478	)		(10,167	)		(14,865	)
Other items, net		(1,515	)		(688	)		(932	)

Actual income tax provision	$	94,677		$	92,457		$	78,953

Effective income tax rate		33.1	%		35.0	%		32.7	%

In 2014, we did not repatriate foreign earnings to the U.S. Therefore, the 2014 tax provision is lower than the prior year as 2013 included $10.1 million of net additional tax expense due to repatriations.

The tax provision for 2013 reflects an increase of $6.7 million due to tax law changes in France. These changes were enacted on December 31, 2013 but retroactive to January 1, 2013. An additional $2.3 million of tax was incurred as a result of new French distribution taxes effective for distributions after August 17, 2012. The increases were partially offset by a benefit of $3.6 million from the expected use of net operating losses in Brazil and a benefit of $1.4 million from a tax law change in Italy.

The tax provision for 2012 reflects the benefit of $0.7 million in Brazil related to claims filed under a program to encourage equity funding of Brazilian entities and deferred tax benefits of $1.8 million, due in part to the merger of some of the company's Indian operations. These benefits were partially offset by $0.7 million of additional expense created by tax law changes enacted in 2012 in France.

Significant deferred tax assets and liabilities as of December 31, 2014 and 2013 are comprised of the following temporary differences:

	2014			2013
Deferred Tax Assets:
Pension liabilities	$	35,582		$	21,106
Stock options		15,672			10,785
Foreign tax credit carryforward		10,348			—
Net operating loss carryforwards		7,896			6,675
U.S. state tax credits		7,641			6,192
Vacation		5,892			6,109
Workers compensation		4,526			4,180
Other		9,584			15,709

Total gross deferred tax assets		97,141			70,756
Less valuation allowance		(7,734	)		(4,840	)

Net deferred tax assets		89,407			65,916

Deferred Tax Liabilities:
Depreciation, amortization and leases		53,121			61,316
Acquisition related intangibles		18,058			20,100

Total gross deferred tax liabilities		71,179			81,416

Net deferred tax assets / (liabilities)	$	18,228		$	(15,500	)

The foreign tax credit carryforward will expire in the years 2023 and 2024. There is no expiration date on $6.2 million of the tax-effected net operating loss carry forwards and $1.7 million (tax effected) will expire in the years 2015 to 2034. The U.S. state tax credit carryforwards of $7.6 million (tax effected) will expire in the years 2015 to 2029. The total amount of both net operating losses and state tax credit carryforwards that will expire in 2015 is $0.1 million. This amount is not expected to be used.

The Company evaluates the deferred tax assets and records a valuation allowance when it is believed it is more likely than not that the benefit will not be realized. The Company has established a valuation allowance of $2.2 million of the $7.9 million of tax effected net operating loss carry forwards. These losses are generally in start-up jurisdictions or locations that have not produced an operating profit to date. A valuation allowance of $5.4 million has been established against the $7.6 million of U.S. state tax credit carry forwards. A valuation allowance of $0.1 million has been established related to other future tax deductions in non-U.S. jurisdictions, the benefit of which management believes will not be realized.

The Company repatriated a portion of foreign subsidiary earnings in 2013 and 2012 in the amount of $79 million each year. All of these amounts were received from our European operations except for $1.3 million from Canada in 2012. All repatriations from Europe were from current year earnings and not from funds previously considered permanently reinvested. The $1.3 million of Canadian funds were distributed as the result of the completion of our 2009 restructuring activities within Canada. The tax effects related to these repatriations were recorded in the period the repatriation decision was made. The Company made no distributions of foreign earnings to the U.S. in 2014.

As of December 31, 2014, the Company had $1.3 billion of undistributed earnings from non-U.S. subsidiaries which have been designated as permanently reinvested. The Company has not made a provision for U.S. or additional foreign taxes on this amount. However, we estimate the amount of additional tax that might be payable on these earnings to be in the range of $100 million to $125 million. These earnings will continue to be reinvested indefinitely and could become subject to the additional tax if they were remitted as dividends or lent to a U.S. affiliate, or if the Company should sell its stock in the subsidiaries.

The Company has not provided for taxes on certain tax-deferred income of a foreign operation. The income arose predominately from government grants. Taxes of approximately $2.2 million would become payable in the event the terms of the grant are not fulfilled.

INCOME TAX UNCERTAINTIES

The Company provides a liability for the amount of tax benefits realized from uncertain tax positions. A reconciliation of the beginning and ending amount of income tax uncertainties is as follows:

	2014			2013			2012

Balance at January 1	$	7,988		$	8,464		$	9,071
Increases based on tax positions for the current year		113			110			245
Increases based on tax positions of prior years		228			381			107
Decreases based on tax positions of prior years		(1,073	)		(92	)		(257	)
Settlements		(407	)		(515	)		(21	)
Lapse of statute of limitations		(441	)		(360	)		(681	)

Balance at December 31	$	6,408		$	7,988		$	8,464

The amount of income tax uncertainties that, if recognized, would impact the effective tax rate is $6.3 million. The Company estimates that it is reasonably possible that the liability for uncertain tax positions will decrease no more than $5.0 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of income taxes. As of December 31, 2014, 2013 and 2012, the Company had approximately $0.7 million, $0.9 million and $1.3 million, respectively, accrued for the payment of interest and penalties, of which approximately ($0.2) million, ($0.4) million and ($0.1) million was recognized in income tax expense in the years ended December 31, 2014, 2013 and 2012, respectively.

The Company or its subsidiaries file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. The major tax jurisdictions the Company files in, with the years still subject to income tax examinations, are listed below:

	Major Tax Jurisdiction		Tax Years Subject to Examination
	United States — Federal		2011 – 2014
	United States — State		2009 – 2014
	France		2012 – 2014
	Germany		2011 – 2014
	Italy		2010 – 2014
	China		2012 – 2014