0000081362 2012-03-31 0000081362 2011-12-31 0000081362 2012-01-01 2012-03-31 0000081362 2011-01-01 2011-03-31 0000081362 2010-12-31 0000081362 2011-03-31 xbrli:shares iso4217:USD iso4217:USD xbrli:shares 10-Q 2012-03-31 false 2012 Q1 --12-31 0000081362 Yes Accelerated Filer Quaker Chemical Corporation No No 12950752 18964000 16909000 162464000 44711000 30877000 17024000 274040000 217580000 133589000 83991000 59064000 31303000 7458000 29368000 37181000 522405000 607000 76257000 9906000 22889000 109659000 47900000 7236000 86946000 251741000 12951000 90836000 184764000 -25902000 262649000 8015000 270664000 522405000 17206000 35356000 259549000 16987000 82916000 7942000 12912000 89725000 6977000 32987000 150676000 505521000 46701000 7094000 505521000 106649000 68125000 131779000 29823000 175932000 255726000 248749000 41771000 249795000 89351000 31783000 58152000 636000 214695000 20901000 -29820000 1.00 30000000 12950752 12911508 1.00 30000000 177638000 117843000 59795000 43093000 16702000 341000 1174000 123000 15992000 3445000 12547000 146000 12693000 747000 11946000 159865000 107131000 52734000 38634000 14100000 539000 1218000 272000 13693000 2822000 10871000 359000 11230000 630000 10600000 0.92 0.91 0.235 0.92 0.91 0.24 3635000 470000 96000 8000 4209000 16902000 1038000 15864000 15477000 4247000 96000 638000 14839000 6000 3821000 324000 3057000 2656000 746000 486000 -38000 262000 -103000 1967000 1186000 868000 14000 40000 -483000 -365000 2357000 4910000 9764000 12478000 -352000 8309000 557000 2397000 1938000 4455000 3178000 3475000 64000 170000 18000 22000 -465000 -343000 6732000 -7099000 -2631000 -2940000 1350000 10000000 189000 231000 3105000 2701000 -1288000 -50000 546000 78000 -2686000 7096000 640000 741000 2055000 -2202000 0 706000 25766000 23564000 <p style='margin-top:0pt; margin-bottom:12pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;margin-left:0px;">Note 1 &#8211; Condensed Financial Information</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The condensed consolidated financial statements included herein are unaudited and have been prepared in accordance with generally accepted accounting principles in the </font><font style="font-family:Times New Roman;font-size:10pt;">United States</font><font style="font-family:Times New Roman;font-size:10pt;"> for interim financial reporting and the United States Securities and Exchange Commission regulations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the </font><font style="font-family:Times New Roman;font-size:10pt;">United States</font><font style="font-family:Times New Roman;font-size:10pt;"> have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the financial statements reflect all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods. The results for the </font><font style="font-family:Times New Roman;font-size:10pt;">three months ended March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company's Annual Report filed on Form 10-K for the year ended December&#160;31, </font><font style="font-family:Times New Roman;font-size:10pt;">2011</font><font style="font-family:Times New Roman;font-size:10pt;">.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">During the first quarter of 2012, t</font><font style="font-family:Times New Roman;font-size:10pt;">he Company adopted the Financial Accounting Standards Board's (&#8220;FASB's&#8221;) guidance regarding presentation of comprehensive income. The guidance requires that comprehensive income be presented with the Condensed Consolidated Statement of Income or as a separate statement immediately following the Condensed Consolidated Statement of Income</font><font style="font-family:Times New Roman;font-size:10pt;">, and can</font><font style="font-family:Times New Roman;font-size:10pt;"> no longer be presented as part of the Consolidated Statement of Changes in Equity. The Company adopted the guidance using the two statement approach</font><font style="font-family:Times New Roman;font-size:10pt;">,</font><font style="font-family:Times New Roman;font-size:10pt;"> and </font><font style="font-family:Times New Roman;font-size:10pt;">the </font><font style="font-family:Times New Roman;font-size:10pt;">adoption of this guidance did not </font><font style="font-family:Times New Roman;font-size:10pt;">have a</font><font style="font-family:Times New Roman;font-size:10pt;"> material </font><font style="font-family:Times New Roman;font-size:10pt;">impact</font><font style="font-family:Times New Roman;font-size:10pt;"> on the Company's results or financial condition.</font></p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">As part of the Company's chemical management services, certain third-party product sales to customers are managed by the Company. Where the Company acts as </font><font style="font-family:Times New Roman;font-size:10pt;">the </font><font style="font-family:Times New Roman;font-size:10pt;">principal, revenue is recognized on a gross reporting basis at the selling price negotiated with customers. Where the Company acts as </font><font style="font-family:Times New Roman;font-size:10pt;">an </font><font style="font-family:Times New Roman;font-size:10pt;">agent, such revenue is recorded using net reporting as service revenues, at the amount of the administrative fee earned by the Company for ordering the goods. Third-party products transferred under arrangements resulting in net reporting totaled </font><font style="font-family:Times New Roman;font-size:10pt;">$</font><font style="font-family:Times New Roman;font-size:10pt;">11,229</font><font style="font-family:Times New Roman;font-size:10pt;"> and $</font><font style="font-family:Times New Roman;font-size:10pt;">11,964</font><font style="font-family:Times New Roman;font-size:10pt;"> for the </font><font style="font-family:Times New Roman;font-size:10pt;">three months ended March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> and </font><font style="font-family:Times New Roman;font-size:10pt;">2011</font><font style="font-family:Times New Roman;font-size:10pt;">, respectively.</font></p> <p style='margin-top:0pt; margin-bottom:12pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;margin-left:0px;">Note 2 &#8211; Recently Issued Accounting Standards</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The FASB updated its guidance in December 2011 regarding disclosures pertaining to the netting and offsetting of derivatives and financial instruments on an entity's Consolidated Balance Sheet. Disclosures required under the updated guidance include presenting gross amounts of assets and liabilities related to financial instruments that may have been historically offset on the Consolidated Balance Sheet. The guidance is effective for annual and interim fiscal periods beginning on or after January 1, 2013. The Company is currently evaluating the effect of this guidance.</font></p> <p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;font-weight:bold;margin-left:0px;">Note 3 &#8211; Income Taxes and Uncertain Income Tax Positions</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The Company's first </font><font style="font-family:Times New Roman;font-size:10pt;">quarter </font><font style="font-family:Times New Roman;font-size:10pt;">of </font><font style="font-family:Times New Roman;font-size:10pt;">2012</font><font style="font-family:Times New Roman;font-size:10pt;"> effective tax rate </font><font style="font-family:Times New Roman;font-size:10pt;">was</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">21.</font><font style="font-family:Times New Roman;font-size:10pt;">5</font><font style="font-family:Times New Roman;font-size:10pt;">%</font><font style="font-family:Times New Roman;font-size:10pt;">, as compared to an effective tax rate of 20.6% for the first quarter of 2011. Both quarters</font><font style="font-family:Times New Roman;font-size:10pt;">' effective tax rates</font><font style="font-family:Times New Roman;font-size:10pt;"> reflect the expiration of applicable statutes of limitations for uncertain tax positions of approximately $0.1</font><font style="font-family:Times New Roman;font-size:10pt;">2</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">and $0.11 </font><font style="font-family:Times New Roman;font-size:10pt;">per diluted share</font><font style="font-family:Times New Roman;font-size:10pt;"> for 2012 and 2011, respectively</font><font style="font-family:Times New Roman;font-size:10pt;">. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The FASB's guidance regarding accounting for uncertainty in income taxes prescribes the recognition threshold and measurement attributes for financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. The guidance further requires the determination of whether the benefits of tax positions will be more likely than not sustained upon audit based upon the technical merits of the tax position. For tax positions that are determined to be more likely than not sustained upon audit, a company recognizes the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement in the financial statements. For tax positions that are not determined to be more likely than not sustained upon audit, a company does not recognize any portion of the benefit in the financial statements. Additionally, the guidance provides for derecognition, classification, penalties and interest, accounting in interim periods, disclosure and transition.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">As of </font><font style="font-family:Times New Roman;font-size:10pt;">March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;">, the Company's cumulative liability for gross unrecognized tax benefits was </font><font style="font-family:Times New Roman;font-size:10pt;">$1</font><font style="font-family:Times New Roman;font-size:10pt;">2,482. </font><font style="font-family:Times New Roman;font-size:10pt;">At </font><font style="font-family:Times New Roman;font-size:10pt;">December 31, 2011</font><font style="font-family:Times New Roman;font-size:10pt;">, the Company's cumulative liability for gross unrecognized tax benefits was $</font><font style="font-family:Times New Roman;font-size:10pt;">12,719</font><font style="font-family:Times New Roman;font-size:10pt;">. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The Company continues to recognize interest and penalties associated with uncertain tax positions as a component of taxes on income</font><font style="font-family:Times New Roman;font-size:10pt;"> before equity in net income of associated companies</font><font style="font-family:Times New Roman;font-size:10pt;"> in its </font><font style="font-family:Times New Roman;font-size:10pt;">Condensed </font><font style="font-family:Times New Roman;font-size:10pt;">Consolidated Statement of Income. </font><font style="font-family:Times New Roman;font-size:10pt;">The Company recognized ($</font><font style="font-family:Times New Roman;font-size:10pt;">215</font><font style="font-family:Times New Roman;font-size:10pt;">) for interest and $</font><font style="font-family:Times New Roman;font-size:10pt;">9</font><font style="font-family:Times New Roman;font-size:10pt;">5</font><font style="font-family:Times New Roman;font-size:10pt;"> for penalties on its </font><font style="font-family:Times New Roman;font-size:10pt;">Condensed </font><font style="font-family:Times New Roman;font-size:10pt;">Consolidated Statement of Income for the </font><font style="font-family:Times New Roman;font-size:10pt;">three months ended</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;">, and ($125) for interest and </font><font style="font-family:Times New Roman;font-size:10pt;">$279 for penalties during </font><font style="font-family:Times New Roman;font-size:10pt;">the three months ended</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">March 31, 2011</font><font style="font-family:Times New Roman;font-size:10pt;">. 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border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:91px;">&#160;</td><td style="width: 12px; text-align:left;border-color:#000000;min-width:12px;">&#160;</td><td style="width: 12px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:12px;">&#160;</td><td style="width: 62px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:62px;">&#160;</td><td style="width: 16px; text-align:left;border-color:#000000;min-width:16px;">&#160;</td><td style="width: 12px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:12px;">&#160;</td><td style="width: 62px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:62px;">&#160;</td><td style="width: 16px; text-align:left;border-color:#000000;min-width:16px;">&#160;</td><td style="width: 12px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:12px;">&#160;</td><td style="width: 62px; 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text-align:left;border-color:#000000;min-width:67px;">&#160;</td><td style="width: 43px; text-align:left;border-color:#000000;min-width:43px;">&#160;</td></tr><tr style="height: 13px"><td style="width: 43px; text-align:left;border-color:#000000;min-width:43px;">&#160;</td><td style="width: 367px; text-align:left;border-color:#000000;min-width:367px;">&#160;</td><td colspan="2" style="width: 79px; text-align:center;border-color:#000000;min-width:79px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Times New Roman;FONT-SIZE: 6.5pt;COLOR: #000000;TEXT-ALIGN: center;">Process</font></td><td style="width: 15px; text-align:left;border-color:#000000;min-width:15px;">&#160;</td><td style="width: 12px; text-align:center;border-color:#000000;min-width:12px;">&#160;</td><td style="width: 67px; text-align:center;border-color:#000000;min-width:67px;">&#160;</td><td style="width: 15px; text-align:left;border-color:#000000;min-width:15px;">&#160;</td><td style="width: 12px; text-align:left;border-color:#000000;min-width:12px;">&#160;</td><td style="width: 67px; text-align:left;border-color:#000000;min-width:67px;">&#160;</td><td style="width: 43px; text-align:left;border-color:#000000;min-width:43px;">&#160;</td></tr><tr style="height: 13px"><td style="width: 43px; text-align:left;border-color:#000000;min-width:43px;">&#160;</td><td style="width: 367px; text-align:left;border-color:#000000;min-width:367px;">&#160;</td><td colspan="2" style="width: 79px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:79px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Times New Roman;FONT-SIZE: 6.5pt;COLOR: #000000;TEXT-ALIGN: center;">Chemicals</font></td><td style="width: 15px; text-align:left;border-color:#000000;min-width:15px;">&#160;</td><td colspan="2" style="width: 79px; border-bottom-style:solid;border-bottom-width:1px;text-align:center;border-color:#000000;min-width:79px;"><font style="FONT-WEIGHT: bold;FONT-FAMILY: Times New Roman;FONT-SIZE: 6.5pt;COLOR: #000000;TEXT-ALIGN: center;">Coatings</font></td><td style="width: 15px; 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(&#8220;ACP&#8221;), a wholly owned subsidiary. In voluntary coordination with the Santa Ana California Regional Water Quality Board, ACP has been remediating the contamination, the principal contaminant of which is perchloroethylene (&#8220;PERC&#8221;). On or about December&#160;18, 2004, the Orange County Water District (&#8220;OCWD&#8221;) filed a civil complaint in Superior Court in </font><font style="font-family:Times New Roman;font-size:10pt;">Orange County</font><font style="font-family:Times New Roman;font-size:10pt;">, </font><font style="font-family:Times New Roman;font-size:10pt;">California</font><font style="font-family:Times New Roman;font-size:10pt;"> against ACP and other parties potentially responsible for groundwater contamination. OCWD was seeking to recover compensatory and other damages related to the investigation and remediation of the contamination in the groundwater. Effective October&#160;17, 2007, ACP and OCWD settled all claims related to this litigation. 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Approximately $</font><font style="font-family:Times New Roman;font-size:10pt;">257</font><font style="font-family:Times New Roman;font-size:10pt;"> and $</font><font style="font-family:Times New Roman;font-size:10pt;">493</font><font style="font-family:Times New Roman;font-size:10pt;"> was accrued at </font><font style="font-family:Times New Roman;font-size:10pt;">March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> and </font><font style="font-family:Times New Roman;font-size:10pt;">December 31, 2011,</font><font style="font-family:Times New Roman;font-size:10pt;"> respectively, to provide for such anticipated future environmental assessments and remediation costs.</font></p><p style='margin-top:0pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">An inactive subsidiary of the Company that was acquired in 1978 sold certain products containing asbestos, primarily on an installed basis, and is among the defendants in numerous lawsuits alleging injury due to exposure to asbestos. The subsidiary discontinued operations in 1991 and has no remaining assets other than the proceeds from insurance settlements received. To date, the overwhelming majority of these claims have been disposed of without payment and there have been no adverse judgments against the subsidiary. Based on a continued analysis of the existing and anticipated future claims against this subsidiary, it is currently projected that the subsidiary's total liability over the next 50 years for thes</font><font style="font-family:Times New Roman;font-size:10pt;">e claims is approximately $</font><font style="font-family:Times New Roman;font-size:10pt;">4,900</font><font style="font-family:Times New Roman;font-size:10pt;"> (excluding costs of defense). Although the Company has also been named as a defendant in certain of these cases, no claims have been actively pursued against the Company, and the Company has not contributed to the defense or settlement of any of these cases pursued against the subsidiary. These cases were handled by the subsidiary's primary and excess insurers who had agreed in 1997 to pay all defense costs and be responsible for all damages assessed against the subsidiary arising out of existing and future asbestos claims up to the aggregate limits of the policies. A significant portion of this primary insurance coverage was provided by an insurer that is now insolvent, and the other primary insurers have asserted that the aggregate limits of their policies have been exhausted. The subsidiary challenged the applicability of these limits to the claims being brought against the subsidiary. In response, two of the three carriers entered into separate settlement and release agreements with the subsidiary in late 2005 and in the first quarter of 2007 for $15,000 and $20,000, respectively. The payments under the latest settlement and release agreement were structured to be received over a four-year period with annual installments of $5,000, the final installment of which was received in the first quarter of 2010. The proceeds of both settlements are restricted and can only be used to pay claims and costs of defense associated with the subsidiary's asbestos litigation. During the third quarter of 2007, the subsidiary and the remaining primary insurance carrier entered into a Claim Handling and Funding Agreement, under which the carrier will pay 27% of defense and indemnity costs incurred by or on behalf of the subsidiary in connection with asbestos bodily injury claims for a minimum of five years beginning July&#160;1, 2007. </font><font style="font-family:Times New Roman;font-size:10pt;">The agreement continues until terminated and can only be terminated by either party by providing the other party with a minimum of two years prior written notice. </font><font style="font-family:Times New Roman;font-size:10pt;">At the end of the term of the agreement, the subsidiary may choose to again pursue its claim against this insurer regarding the application of the policy limits. The Company also believes that, if the coverage issues under the primary policies with the remaining carrier are resolved adversely to the subsidiary and all settlement proceeds were used, the subsidiary may have limited additional coverage from a state guarantee fund established following the insolvency of one of the subsidiary's primary insurers. Nevertheless, liabilities in respect of claims may exceed the assets and coverage available to the subsidiary. </font></p><p style='margin-top:0pt; margin-bottom:3pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">If the subsidiary's assets and insurance coverage were to be exhausted, claimants of the subsidiary may actively pursue claims against the Company because of the parent-subsidiary relationship. Although asbestos litigation is particularly difficult to predict, especially with respect to claims that are currently not being actively pursued against the Company, the Company does not believe that such claims would have merit or that the Company would be held to have liability for any unsatisfied obligations of the subsidiary as a result of such claims. After evaluating the nature of the claims filed against the subsidiary and the small number of such claims that have resulted in any payment, the potential availability of additional insurance coverage at the subsidiary level, the additional availability of the Company's own insurance and the Company's strong defenses to claims that it should be held responsible for the subsidiary's obligations because of the parent-subsidiary relationship, the Company believes it is not probable that the Company will incur any material losses. All of the asbestos cases pursued against the Company challenging the parent-subsidiary relationship are in the early stages of litigation. The Company has been successful </font><font style="font-family:Times New Roman;font-size:10pt;">to date</font><font style="font-family:Times New Roman;font-size:10pt;"> having claims naming it dismissed during initial proceedings. Since the Company may be in this early stage of litigation for some time, it is not possible to estimate additional losses or range of loss, if any.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">As initially disclosed in the Company's second quarter 2010 Form 10-Q, one of the Company's subsidiaries may have paid certain value-added-taxes (&#8220;VAT&#8221;) incorrectly and, in certain cases, may not have collected sufficient VAT from certain customers. The VAT rules and regulations at issue are complex, vary among the jurisdictions and can be contradictory, in particular as to how they relate to the subsidiary's products and to sales between jurisdictions.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">Since its inception, the subsidiary had been consistent in its VAT collection and remittance practices and had never been contacted by any tax authority relative to VAT. Now the subsidiary has determined that for certain products, a portion of the VAT was incorrectly paid and that the total VAT due exceeds the amount originally collected and remitted by the subsidiary. In 2010, three jurisdictions contacted the subsidiary and since then, the subsidiary has either participated in an amnesty program or entered into a settlement whereby it paid a reduced portion of the amounts owed in resolution of those jurisdictions' claims. The subsidiary has modified its VAT invoicing and payment procedures to eliminate or mitigate future exposure.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">In analyzing the subsidiary's exposure, it is difficult to estimate both the probability and the amount of any potential liabilities due to a number of factors, including: the decrease in exposure over time due to applicable statutes of limitations and actions taken by the subsidiary, the joint liability of customers and suppliers for a portion of the VAT, the availability of a VAT refund for VAT incorrectly paid through an administrative process, any amounts which may have been or will be paid by customers, as well as the timing and structure of any tax amnesties or settlements. In addition, interest and penalties on any VAT due can be a multiple of the base tax. The subsidiary may contest any tax assessment administratively and/or judicially for an extended period of time, but may ultimately resolve its disputes through participation in tax amnesty programs, which are a common practice for settling tax disputes in the jurisdictions in question and which have historically occurred on a regular basis, resulting in significant reductions of interest and penalties. Also, the timing of payments and refunds of VAT may not be contemporaneous, and, if additional VAT is owed, it may not be fully recoverable from customers. As a result, this matter has the potential to have a material adverse impact on the Company's financial position, liquidity and capital resources and the results of operations.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">In 2010, the Company recorded a net charge of $4,132, which consisted of a net $3,901 charge related to two tax dispute settlements entered into by the subsidiary, as well as a net $231 charge representing management's best estimate based on the information available to it, including the factors noted above, of the amount that ultimately may be paid related to the other jurisdiction that has made inquiries. </font><font style="font-family:Times New Roman;font-size:10pt;">At March 31, 2012</font><font style="font-family:Times New Roman;font-size:10pt;"> and </font><font style="font-family:Times New Roman;font-size:10pt;">December 31, 2011</font><font style="font-family:Times New Roman;font-size:10pt;">, the Company had </font><font style="font-family:Times New Roman;font-size:10pt;">no</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">accrual for </font><font style="font-family:Times New Roman;font-size:10pt;">remaining payments to be made under tax dispute settlements entered into by the subsidiary. </font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The charges taken by the Company in 2010 assume a successful recovery of the VAT incorrectly paid, as well as reductions in interest and penalties from anticipated future amnesty programs or settlements. On a similar basis, if all other potentially impacted jurisdictions were to initiate audits and issue assessments, the remaining exposure, net of refunds, could be from $0 to $</font><font style="font-family:Times New Roman;font-size:10pt;">17,000</font><font style="font-family:Times New Roman;font-size:10pt;"> with one jurisdiction representing approximately</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">81</font><font style="font-family:Times New Roman;font-size:10pt;"> </font><font style="font-family:Times New Roman;font-size:10pt;">percent of this additional exposure, assuming the continued availability of future amnesty programs or settlements to reduce the interest and penalties. If there are future assessments but no such future amnesty programs or settlements, the potential exposure could be higher.</font></p><p style='margin-top:0pt; margin-bottom:6pt'><font style="font-family:Times New Roman;font-size:10pt;margin-left:0px;">The Company is party to other litigation which management currently believes will not have a material adverse effect on the Company's results of operations, cash flows or financial condition.</font></p>