INCOME TAXES

Under Accounting Standards Codification ("ASC") 270, “Interim Reporting”, and ASC 740-270, “Income Taxes – Intra Period Tax Allocation”, the Company is required to adjust its effective tax rate for each quarter to be consistent with the estimated annual effective tax rate. Jurisdictions with a projected loss for the full year where no tax benefit can be recognized are excluded from the calculation of the estimated annual effective tax rate. Applying the provisions of ASC 270 and ASC 740-270 could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

Effective Tax Rate

The benefit from income taxes for the six months ended June 30, 2013 was $39 on a pre-tax loss of $14,091, compared to a benefit from income taxes of $4,765 on pre-tax loss of $7,591 for the same period in 2012. The Company’s effective income tax rate was 0.3% and 62.8% for the six months ended June 30, 2013 and 2012, respectively. The change in the effective tax rate was primarily attributable to the Company's inability to benefit from losses in certain foreign jurisdictions and a reduction of FIN 48 liabilities in 2012 in connection with the state tax settlement with the Commonwealth of Pennsylvania

Uncertain Tax Positions

As of June 30, 2013 and December 31, 2012, the Company had $3,847 and $3,845, respectively, of unrecognized tax benefits, including interest and penalties, which if recognized in the future, would lower the Company’s annual effective income tax rate. Accrued interest and penalties were $739 and $701 as of June 30, 2013 and December 31, 2012, respectively. Estimated interest and penalties are classified as part of the provision for income taxes in the Company’s Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) and totaled to a provision of $58 and a benefit of $938 for the six months ended June 30, 2013 and 2012, respectively.

In many cases, the Company’s unrecognized tax benefits are related to tax years that remain subject to examination by the relevant tax authorities. Tax years with net operating losses ("NOLs") remain open until such losses expire or until the statutes of limitations for those years when the NOLs are used expire. As of June 30, 2013, the Company's open tax years, which remain subject to examination by the relevant tax authorities or are currently under income tax examination, were principally as follows:



		Year
Earliest tax years which remain subject to examination by the relevant tax authorities:
U.S. Federal		2009
Majority of other U.S. state and local jurisdictions		2008
United Kingdom		2011
Australia		2008
Majority of other foreign jurisdictions		2007
Earliest tax years which are currently under income tax examination:
China		2011

The Company believes that its tax reserves are adequate for all years that remain subject to examination or are currently under examination.

Based on information available as of June 30, 2013, it is reasonably possible that the total amount of unrecognized tax benefits could decrease in the range of $50 to $300 over the next 12 months as a result of projected resolutions of global tax examinations and controversies and potential expirations of the applicable statutes of limitations.