Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

Note 12. Income Taxes

As of September 30, 2011, the total balance of unrecognized tax benefits was $4.1 million compared with $4.5 million at December 31, 2010. The decrease in unrecognized tax benefits was primarily due to expiring statutes of limitations in Germany and other jurisdictions, and the settlement of the 2003 and 2004 tax audits in Germany and certain items related to the 2005 audit. The unrecognized tax benefits at September 30, 2011 include $4.1 million of uncertain tax positions that would affect the Company's effective tax rate if recognized, of which $2.0 million would be offset by a reduction of a corresponding deferred tax asset. The Company does not expect any significant changes to its unrecognized tax benefits within the next twelve months.

The Company's accounting policy with respect to interest expense on underpayments of income tax and related penalties is to recognize such interest expense and penalties as part of the provision for income taxes. The Company's income tax liabilities at September 30, 2011 include approximately $0.8 million of accrued interest and $0.3 million of penalties.

The Company's U.S. federal income tax returns for the tax years 2008 and 2009 are under examination by the Internal Revenue Service and this audit is expected to be finalized during the fourth quarter of 2011. The examination was initiated during the quarter ended September 30, 2010. As of the date of this report, the examination is in its final stages and has not identified any material changes. The statutes of limitations for the U.S. state tax returns are open beginning with the 2006 tax year, except for three states for which the statutes have been extended, beginning with the 2003 tax year for one state and the 2006 tax year for the other two states.

The Company is subject to income tax in approximately 30 jurisdictions outside the U.S. The statute of limitations varies by jurisdiction. The Company's significant operations outside the U.S. are located in China, the United Kingdom and Germany. In Germany, the Company has finalized the tax audits for the 2003 to 2007 tax years. Tax years 2008 and beyond remain subject to potential examination. These examinations have not identified any material changes. In China and the United Kingdom, tax years prior to 2006 are closed. In addition, audits are being conducted in certain other countries. To date, no material adjustments have been proposed as a result of these audits.

The following table summarizes the Company's income tax provision and effective income tax rate:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Income before income taxes	$	103,820		$	63,458		$	281,217		$	155,968
Provision for income taxes	$	29,543		$	16,610		$	79,345		$	38,943
Effective income tax rate		28.5	%		26.2	%		28.2	%		25.0	%

The year over year increase in the effective tax rate primarily reflects a higher proportion of taxable income in the U.S. in 2011 compared to 2010.