14.

INCOME TAXES

The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The Company operates globally with operations in various tax jurisdictions outside of the United States. Accordingly, the effective income tax rate is a composite rate reflecting the geographic mix of earnings in various tax jurisdictions and the applicable rates. Our interim provision for income taxes is measured using an estimated annual effective tax rate, adjusted for discrete items that occur within the periods presented. Our future effective tax rates could be adversely affected by earnings being lower than anticipated in countries with lower statutory rates, greater losses than anticipated in countries with lower statutory tax rates, increases in recorded valuation allowances of tax assets, or changes in tax laws or interpretations thereof.

Our effective tax rate differs from the Federal United States statutory tax rate of 35% due to accrual of state taxes, non-deductible expenses, foreign earnings taxed at different rates, accrual of interest on tax liabilities, accrual of United States residual tax on earnings that are not indefinitely reinvested and the effect of valuation allowances. We record valuation allowances on tax benefits of losses arising in certain unprofitable countries in international markets. The tax benefit during the nine months ended September 30, 2013 was increased by approximately $14,477 of discrete items, consisting primarily of a tax benefit of $14,355 due to reversals of uncertain tax positions and accrued interest. As a result of settlements of tax examinations and lapses of statutes of limitations during the nine months ended September 30, 2013, the Company recognized previously unrecognized tax positions of $12,979 which on a net of tax basis impacted the effective rate by $12,391. The Company also reversed accrued interest on unrecognized tax positions of $3,245, which impacted the effective tax rate by $1,963. Of these adjustments, $1,486 and $12,869 occurred in the quarter ended September 30, 2013 and March 31, 2013 respectively. The tax matters reversed relate primarily to characterization of certain intercompany loans for tax purposes and allocation of income among jurisdictions.

Included in the loss from discontinued operations in the nine months ended September 30, 2013, and September 30, 2012, is an income tax benefit of $6,407 and an income tax provision of $5,213, respectively.

The tax benefit for the nine months ended September 30, 2012, was increased by $45,771 of discrete items, consisting primarily of $19,276 of tax benefit related to certain tax losses arising from the Company’s restructuring. This benefit was partially offset by the effect of valuation allowances, uncertain tax positions, and accruals of interest on tax liabilities. In addition, the Company recognized previously unrecognized tax benefits and reversed accruals of interest on unrecognized tax benefits which impacted the tax provision on a net of tax basis by $35,566.

During the three months ended September 30, 2012, the Company completed a tax examination with the United States Internal Revenue Service for the years 2006 through 2009. As a result of settlement of the examination, the Company recognized previously unrecognized tax benefits of $38,024 which, on a net of tax basis, impacted the effective rate by $29,059. The Company also reversed accrued interest related to unrecognized tax benefits of $8,034 which, on a net of tax basis, impacted the effective rate by $4,860. The tax matters recognized related to the allocation of income among tax jurisdiction and the benefits related to certain tax net operating losses. The examination did not have a material impact to the Company and resulted in no significant cash tax due. In the third quarter of 2012, the Company also settled a state tax matter which resulted in recognition of unrecognized tax benefits and reversals of accrued interest which impacted the income tax provision on a net of tax basis by $403. The total benefit reflected in the third quarter of 2012 due to reversals of tax and interest was $34,322.

In the three months ended June 30, 2012, the Company recognized $1,015 of previously unrecognized tax benefits, which on a net of tax basis impacted the effective tax rate by $660 resulting from the settlements and adjustments to estimated tax liabilities. The Company also reversed accrued interest related to unrecognized tax benefits of $966, which on a net of tax basis impacted the effective tax rate by $584. The total benefit reflected in the income tax provision in the third quarter of 2012 due to reversals of tax and interest was $1,244.

As further discussed in Note 10 – Goodwill, in the three months ended September 30, 2012, the Company reclassified its Careers-China reporting unit as a business held for sale and recognized a charge for impairment of goodwill. Further, as a result of management revising the estimated timing of the profitability of the Careers-China business, we recorded a full valuation allowance of the deferred tax asset related to the Careers-China business. This is reflected as a $9,090 tax charge in the loss from discontinued operations, net of tax, for the three and nine months ended September 30, 2012 (see Note 9—Discontinued Operations).

The Company is currently under examination by several domestic and international tax authorities. Presently, no material adjustments have been proposed. Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. The gross recorded liability for uncertain tax positions (inclusive of estimated interest and penalties thereon) as of September 30, 2013 and December 31, 2012 is recorded on the Company’s consolidated balance sheet as long-term income taxes payable of $51,298 and $63,465 respectively. Interest and penalties related to underpayment of income taxes are classified as a component of income tax expense in the consolidated statements of operations and comprehensive loss. The Company estimates that it is reasonably possible that unrecorded tax benefits may be reduced by an amount ranging from $0 to $14,000 in the next twelve months due to expirations of statutes of limitations or settlement of tax examinations. The tax matters concerned relate to the allocation of income among jurisdictions, and the amount of prior year tax loss carryovers.