Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

INCOME TAXES

8. INCOME TAXES

The (benefits from) provisions for income taxes for the three-month periods ended June 30, 2012 and 2011 were $(3.2) million and $560,000, respectively. The (benefits from) provisions for income taxes for the six-month periods ended June 30, 2012 and 2011 were $(2.6) million and $1.0 million, respectively. The tax (benefits from) provision for income taxes for the three and six-month period ended June 30, 2012 consisted primarily of taxes on income in foreign jurisdictions, a deferred tax benefit related to the release of valuation allowance resulting from the deferred tax liability recorded in purchase price accounting for the Productive Resources, LLC acquisition, as well as a tax benefit for the release of certain existing reserves for uncertain tax positions, primarily due to a favorable tax ruling in India.

The tax provisions for the three and six-month periods ended June 30, 2011 consisted primarily of taxes on income in foreign jurisdictions, a tax benefit for the release of certain existing reserves for uncertain tax positions, primarily due to the expiration of statutes of limitations, and taxes, interest and penalties recorded in relation to the Company’s uncertain tax positions. The tax provision for the six-month period also includes a foreign tax benefit for the $415,000 related to a refund received for an amended 2008 tax filing.

The balance of unrecognized tax benefits at June 30, 2012, not including interest and penalties, was $4.0 million, which, if recognized, would affect the effective income tax rate in future periods. Lionbridge also recognizes interest and penalties related to unrecognized tax benefits in tax expense. At June 30, 2012, Lionbridge had approximately $1.5 million of interest and penalties accrued related to unrecognized tax benefits.

The Company conducts business globally and in the normal course of business is subject to examination by local, state and federal jurisdictions in the United States as well as in multiple foreign jurisdictions. Currently, no Internal Revenue Service audits are underway and audits in Belgium, Canada, Finland, Germany, India and Poland are in varying stages of completion. Open audit years are dependent upon the tax jurisdiction and range from 2003 to present.

At June 30, 2012, no provision for U.S. income and foreign withholding taxes has been made for unrepatriated foreign earnings because it is expected that such earnings will be reinvested indefinitely.

Through March 31, 2011, Lionbridge’s India subsidiary, Lionbridge Technologies Private Limited (Lionbridge India), had a tax holiday granted by the Indian government and was exempt from corporate income tax on its operating profits. This tax holiday expired at the end of the Indian subsidiary’s March 31, 2011 tax year, and the Indian subsidiary has been subject to corporate income tax effective April 1, 2011.

Lionbridge’s management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Under the applicable accounting standards, management has considered Lionbridge’s history of losses and concluded that, with the exception of certain foreign tax jurisdictions, it is more-likely-than-not that Lionbridge will not generate sufficient future taxable income to benefit from the tax assets prior to their expiration. Accordingly, full valuation allowances have been maintained against those tax assets.