NOTE 14 — INCOME TAXES

The following table sets forth information about the Company’s income tax provision for the periods indicated (dollar amounts in thousands):

	Three Months ended September 30,						Nine Months ended September 30,
	2013			2012			2013			2012
Income before income taxes	$	19,982		$	20,223		$	56,221		$	41,836
Income tax provision		7,777			6,470			20,537			15,269
Net income	$	12,205		$	13,753		$	35,684		$	26,567

Income tax provision as a percentage of income before income taxes		38.9	%		32.0	%		36.5	%		36.5	%

As of September 30, 2013, the Company anticipates that its effective tax rate for the year 2013 will be approximately 36.7%.

The provision rate of 38.9% in the quarter ended September 30, 2013 reflects the impact of $1.5 million in acquisition-related costs that are expensed for book purposes, but are not deductible for tax purposes. The provision rate of 36.5% for the nine months ended September 30, 2013 benefited from certain prior years’ R&D tax credits that were not recognized in the tax provision recorded in those years.

The provision rate of 32.0% in the quarter ended September 30, 2012 included the impact of a discrete adjustment for R&D tax credits claimed on the Company’s 2011 income tax return that were not known and quantifiable until the third quarter of 2012, and the effect of court ruling in India that favorably impacted the deductibility of certain acquisition-related costs incurred by the Company in the first quarter of 2012.

In accordance with ASC 740-10-25, Income Taxes – Recognition, the Company reviews its tax positions to determine whether it is “more likely than not” that its tax positions will be sustained upon examination, and if any tax positions are deemed to fall short of that standard, the Company establishes reserves based on the financial exposure and the likelihood that its tax positions would not be sustained. Based on its evaluations, the Company determined that it would not recognize tax benefits on $0.9 million and $1.5 million related to uncertain tax positions as of September 30, 2013 and December 31, 2012, respectively. If recognized, $0.9 million and $0.3 million of these tax positions as of September 30, 2013 and December 31, 2012, respectively, will impact the Company’s effective rate. Due to recent decisions in Indian case law, in the second quarter of 2013 the Company reevaluated $1.2 million of the balance at December 31, 2012, and determined that it is more likely than not that these positions would be sustained upon examination. These positions relate to temporary differences, and accordingly, the recognition thereof does not impact the Company’s effective tax rate.