Note 10 – Income Taxes

The Company's interim period income tax provision is determined as follows:

At the end of each fiscal quarter, the Company estimates the income tax that will be provided for the fiscal year.

The forecasted annual effective tax rate is applied to the year-to-date ordinary income (loss) at the end of each quarter to compute the year-to-date tax applicable to ordinary income (loss). The term ordinary income (loss) refers to income (loss) from continuing operations before income taxes, excluding significant, unusual or infrequently occurring items. The tax provision or benefit related to ordinary income (loss) in each quarter is the difference between the most recent year-to-date and the prior quarter-to-date computations.

The tax effects of significant or infrequently occurring items are recognized as discrete items in the interim periods in which the events occur. The impact of changes in tax laws or rates on deferred tax amounts, the effects of changes in judgment about valuation allowances established in prior years, and changes in tax reserves resulting from the finalization of tax audits or reviews are examples of significant, unusual or infrequently occurring items which are recognized as discrete items in the interim period in which the event occurs.

The determination of the forecasted annual effective tax rate is based upon a number of significant estimates and judgments, including the forecasted annual income (loss) before income taxes of the corporation in each tax jurisdiction in which it operates, the development of tax planning strategies during the year, and the need for a valuation allowance. In addition, the Company's tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following table sets out the tax provision (benefit) and the effective tax rates of the Company:

	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands)	2012				2011				2012				2011

Income (loss) before income taxes	$	(2,356	)		$	7,029			$	(6,734	)		$	17,083
Income tax provision (benefit)	$	(143	)		$	(1,057	)		$	(1,418	)		$	2,246
Effective tax rate		6.1		%		(15.0	)	%		21.1		%		13.1	%

In the third quarter of 2012, the Company recognized a tax benefit of $143 on a loss before income taxes of $2,356, or an effective tax rate of 6.1 percent, as compared to an effective tax rate of (15.0) percent for the third quarter of 2011. The third quarter of 2012 effective tax rate reflects the benefits of a reduction in forecasted income from the United States operations relative to the non-U.S. operations and the release of valuation allowances during the third quarter of 2011. In the third quarter of 2011, certain valuation allowances totaling $4,008 were released on deferred tax assets related to the Company's United Kingdom subsidiary, primarily due to sustained profitability, utilization of deferred tax assets and further development of business opportunities.

For the first nine months of 2012, the Company recognized a tax benefit of $1,418 on a loss before income taxes of $6,734, or an effective tax rate of 21.1 percent, as compared to an effective tax rate of 13.1 percent for the first nine months of 2011. The lower rate on the income tax benefit for the first nine months of 2012, as compared to an income tax provision for the first nine months of 2011, is primarily due to the release of valuation allowances during the first nine months of 2011, offset by changes in the mix of domestic and foreign earnings, and rate impacts of discrete expenses applied to the current loss.

The Company had reserves for unrecognized tax benefits, exclusive of interest and penalties, of $1,586 and $1,362 at September 30, 2012 and December 31, 2011, respectively. The reserve for uncertain tax positions as of September 30, 2012 increased primarily due to increases for the establishment of additional uncertain tax positions.