13.

Income Taxes

The Company's income tax expense amounts for the six months ended June 30, 2016, and June 30, 2015, differed from the expected income tax amounts computed by applying the federal corporate income tax rate of 35% to income before income taxes for the periods as shown in the table below.

(in thousands)	Three months ended June 30,								Six months ended June 30,
	2016				2015				2016			2015

Provision for income taxes		$	108			$	73		$	196			$	161
Effective tax rate			49.3	%			(5.1	)%		44.0	%			(8.9	)%

The Company's increase in effective tax rate for 2016 as compared to 2015 resulted mainly from a reduction in pre-tax loss in the U.S. The Company's income tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. Tax expense in both years is comprised mainly of foreign income tax expense, Alternative Minimum Tax, state taxes, and deferred tax expense relating to the tax amortization of goodwill.

Because of its net operating loss carryforwards, the Company is subject to U.S. federal and state income tax examinations from the year 1997 forward. The Company is subject to foreign tax examinations by tax authorities for years 2010 forward for Sweden, 2012 forward for China, and 2014 forward for both India and the UK.

An uncertain tax position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than 50%) that the position would be sustained upon examination by tax authorities that have full knowledge of all relevant information. A recognized tax position is then measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. Interest and penalties related to income taxes are accounted for as income tax expense.

The Company recognizes deferred tax assets to the extent that it is believed that these assets are more likely than not to be realized. The Company has evaluated all positive and negative evidence and determined that it will continue to assess a full valuation allowance on its U.S., Swedish, and Chinese net deferred assets as of June 30, 2016. The Company has determined that it is more likely than not that it will realize the benefits of its deferred taxes in the UK and India. In 2015, the Company paid income taxes in the UK and India and expects to do so again in 2016.