Income Taxes

Effective Tax Rates

The Company's effective tax rates attributable to income from continuing operations are as follows:



	2012	2011
Three months ended September 30,	29.9%	31.0%
Nine months ended September 30,	30.1%	31.1%

The Company's effective tax rates attributable to income from continuing operations for the three and nine months ended September 30, 2012 are lower than those for the comparable prior year periods primarily due to:


•	Lower taxes on non-U.S. earnings in 2012, partially offset by


•	The statutory expiration of the U.S. federal credit for increasing research activities as of December 31, 2011.

The Company's effective tax rates attributable to income from continuing operations for the three and nine months ended September 30, 2012 are lower than the statutory U.S. federal tax rate of 35% primarily as a result of income earned in jurisdictions with tax rates lower than the statutory U.S. federal tax rate and the U.S. federal tax benefit for domestic manufacturing activities. These items are partially offset by net U.S. state taxes, and certain expenses that are statutorily non-deductible for income tax purposes.

Unrecognized Tax Benefits

During the three and nine months ended September 30, 2012, the Company's gross unrecognized tax benefits increased by $5.3 million and $6.5 million, respectively, primarily as a result of tax positions taken in both the current and prior periods. During the three and nine months ended September 30, 2012, the total amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate increased by $5.1 million and $6.3 million, respectively.

The Company recognizes interest related to uncertain tax positions in its income tax expense. During the three and nine months ended September 30, 2012, the total amount of interest (income) / expense related to unrecognized tax benefits recognized in the Company's consolidated statement of operations was $(0.1) million and $0.1 million, respectively. At both September 30, 2012 and December 31, 2011, the total amount of accrued interest expense related to unrecognized tax benefits recorded in the Company's consolidated balance sheet was $0.6 million.

As of September 30, 2012, it is reasonably possible that the Company's unrecognized tax benefits will decrease by $1.3 million during the next twelve months due to a combination of tax positions expected to be taken and the expiration of various statutes of limitations on assessment.

Income Tax Examinations

The Company's income tax returns are subject to examination by the U.S. federal, U.S. state and local, and non-U.S. tax authorities. The U.S. Internal Revenue Service has completed its examinations of the Company's consolidated U.S. federal income tax returns through 2008. The Company's consolidated U.S. federal income tax returns for the years 2009 through 2011, together with those of acquired subsidiaries, remain open to examination.

With few exceptions, the Company is no longer subject to U.S. state and local or non-U.S. income tax examinations for years before 2007. As of September 30, 2012, the Company and its subsidiaries are under examination in various jurisdictions, including Germany (2002 through 2009) and California (2007 and 2008). In addition, the Company is currently appealing an assessment in Canada (2007 through 2009).

The Company believes that adequate accruals have been provided for all jurisdictions' open years.