15.

Income Taxes

For the quarter ended September 30, 2014, the Company recorded income tax expense of $26,740 (effective rate of 32.5 percent excluding discrete items) compared with $17,845 (effective rate of 44.7 percent excluding discrete items) for the comparable period in 2013. For the nine-month period ended September 30, 2014, the Company recorded income tax expense of $75,093 (effective rate of 33.0 percent excluding discrete items) compared with $65,104 (effective rate of 32.9 percent excluding discrete items) for the comparable period in 2013. The 2014 quarter and nine-month period income tax expense is calculated using the forecasted multi-jurisdictional annual effective tax rates to determine a blended annual effective tax rate. This rate differs from the U.S. federal statutory rate of 35 percent primarily because of the projected mix of earnings in international jurisdictions with lower tax rates, partially offset by losses in jurisdictions with no tax benefit due to valuation allowances. Income tax expense for the quarter and nine-month period is higher due primarily to increased earnings in both the U.S. and non-U.S. jurisdictions compared with the same periods of the prior year.

Tax expense for the quarter and nine-month periods ended September 30, 2014 included discrete tax expense of $298 and $400, respectively. This primarily includes amounts recorded for U.S. return to provision differences and additional expense for uncertain tax positions. For the quarter and nine-month periods ended September 30, 2013, income tax expense included a discrete tax expense of $8,389 and $8,292, respectively. This primarily includes amounts recorded for U.S. return to provision differences, the expiration of unused state tax credits, the unfavorable impact on deferred tax assets from a U.K. statutory tax rate reduction and additional expense for uncertain tax positions.

The Company continues to maintain a valuation allowance pursuant to ASC 740, “Accounting for Income Taxes,” against a portion of its U.S. and non-U.S. deferred tax asset position, as it cannot assure the utilization of these assets before they expire. In the U.S., the Company has offset a portion of its deferred tax asset relating primarily to a capital loss carryforward by a valuation allowance of $22,072. In addition, the Company has recorded valuation allowances of $9,907 relating to non-U.S. net operating losses for a total valuation allowance of $31,979. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company will continue to reassess the possibility of releasing all or part of the valuation allowances currently in place when they are deemed to be realizable.

The Company maintains an ASC 740-10, “Accounting for Uncertainty in Income Taxes,” liability for unrecognized tax benefits for permanent and temporary book/tax differences. At September 30, 2014, the Company’s liability, exclusive of interest, totals approximately $6,764. The Company accrued an immaterial amount of interest expense related to these unrecognized tax benefits during the quarter.

The Company and its subsidiaries are subject to income tax examination in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and foreign tax examinations by income and franchise tax authorities for years prior to 2007.