Income Taxes

Our effective tax rate was (4.3) percent for the six months ended June 30, 2014, compared to 27.8 percent for the six months ended June 30, 2013. Our effective tax rate differs from the United States statutory tax rate primarily due to valuation allowances, earnings in countries with differing statutory tax rates, accruals related to uncertain tax positions, intraperiod tax allocation, and tax planning structures. At June 30, 2014 and December 31, 2013, we had $0.8 million and $1.3 million, respectively, of gross unrecognized tax benefits, exclusive of interest and penalties. Tax benefits, exclusive of interest and penalties, of $0.1 million and $0.6 million were recorded in our income tax provision for the three months and the six months ended June 30, 2014, respectively, due to expirations of statutes of limitations. During the three months and the six months ended June 30, 2013, we recorded tax benefits, exclusive of interest and penalties, of zero and $0.5 million, respectively.

FASB ASC 740-20, "Income Taxes - Intraperiod Tax Allocation," requires that the provision for income taxes be allocated between continuing operations and other categories of earnings (such as discontinued operations or other comprehensive income) for each tax jurisdiction. For periods in which there is a year-to-date pre-tax loss from continuing operations and pre-tax income in other categories of earnings, the tax provision is first allocated to the other categories of earnings. A related tax benefit is then recorded in continuing operations. Tax benefits of $1.0 million and $1.6 million were recorded in our income tax provision for the three months and six months ended June 30, 2014, respectively. There were no similar benefits recorded for the three months and six months ended June 30, 2013.

Our current and future provision for income taxes for 2014 is impacted by valuation allowances. In the United States, the Netherlands and Portugal, we have recorded valuation allowances against our deferred income tax assets. We review the need for valuation allowances on a quarterly basis, or more frequently if events indicate that a review is required, in order to assess the likelihood of the realization of our deferred tax assets. In assessing the need for recording or reversing a valuation allowance, we weigh all available positive and negative evidence. Examples of the evidence we consider are cumulative losses in recent years, losses expected in early future years, a history of potential tax benefits expiring unused, prudent and feasible tax planning strategies that could be implemented, and whether there were unusual, infrequent or extraordinary items to be considered. Despite our 2013 improvement in financial results in the U.S., management concluded that in consideration of our loss on redemption of debt in the second quarter of 2014, the duration and magnitude of our U.S. operating losses, the current U.S. economic environment and competitive landscape, it is our judgment that we have not yet achieved profitability of a duration and magnitude sufficient to release our valuation allowance against our deferred tax assets. Accordingly, we continue to maintain a valuation allowance related to our net deferred tax assets in the U.S. Additionally, we continue to maintain a valuation allowance in certain foreign jurisdictions due to continued operating losses, competitive landscape, and other market forces. We will continue to monitor and assess the need for a valuation allowance in all our jurisdictions in the upcoming quarters.

Income tax payments consisted of the following:



	Three months ended June 30,				Six months ended June 30,
(dollars in thousands)	2014		2013		2014		2013
Total income tax payments, net of refunds	$	2,425	$	7,270	$	5,153	$	9,539
Less: credits or offsets	948		1,339		1,860		1,724
Cash paid, net	$	1,477	$	5,931	$	3,293	$	7,815