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Income Taxes
3 Months Ended
Mar. 31, 2013
Income Taxes

Note 9 — Income Taxes

The Company is subject to income tax in multiple jurisdictions and the use of estimates is required to determine the provision for income taxes. For the three months ended March 31, 2013 and 2012 the Company recorded an income tax provision of $3.1 million and $2.3 million, respectively. The income tax provision is based on the estimated annual effective tax rate for the year applied to pre-tax income. The effective income tax rate for the three months ended March 31, 2013 was 27.3 percent compared with 32.3 percent in the same period of the prior year.

The effective income tax rate for the three months ended March 31, 2013 differs from the U.S. federal statutory rate of 35 percent primarily due to the components of income, particularly as it relates to the federal research and development credit. On January 2, 2013, the American Taxpayer Relief Act of 2012 (the Act) was signed into law. Included in the Act was the extension of the research and development credit for years 2012 and 2013. As the Act was enacted during 2013, the federal portion of the 2012 research and development credit was recognized in the first quarter of 2013. As a result, during the three months ended March 31, 2013, the Company recorded a tax benefit of $0.3 million, which translated to an effective income tax rate reduction of 3.0 percent, related to the federal research and development credit for 2012.

The Company has liabilities related to unrecognized tax benefits totaling $0.4 million at March, 2013 and December 31, 2012 that, if recognized, would result in a reduction of the Company’s effective tax rate. There were no material adjustments to the unrecorded tax benefits during the three months ended March 31, 2012, and the Company does not anticipate that total unrecognized tax benefits will materially change in the next twelve months. The Company recognizes interest and penalties related to income tax matters in income tax expense, and reports the liability in current or long-term income taxes payable as appropriate.