INCOME TAXES

6 Months Ended

Jun. 30, 2013

INCOME TAXES [ABSTRACT]

INCOME TAXES

(8)INCOME TAXES

The Company accounts for income taxes in accordance with the accounting literature forincome taxes, which requires recognition of deferred tax assets and liabilities for the expected future income tax consequences of transactions that have been included in the Consolidated Financial Statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. Quarterly, the Company assesses the likelihood that its net deferred tax assets will be recovered. Based on the weight of all available evidence, both positive and negative, the Company records a valuation allowance against deferred tax assets when it is more-likely-than-not that a future tax benefit will not be realized.

In 2005, the Company sought relief under the United States-Canada Income Tax Convention for avoidance of double taxation arising from adjustments to the taxable income assessed in the U.S. and Canada with respect to the years 2001 and 2002. On February 20, 2011, the Company received notice of an adverse decision by the Canadian Revenue Agency (“CRA”) in regards to the Company's request. Consistent with accounting for tax positions that no longer meet the recognition criteria, in the first quarter of 2011 the Company derecognized income tax positions totaling $8.6 million through income tax expense and filed for Judicial Review of CRA's actions with the Federal Court of Canada. On March 20, 2013, the Company presented its arguments in the Federal Court of Canada and asked the Court to issue a writ of mandamus to compel the CRA to accept the Company's application for Competent Authority consideration. On May 29, 2013, the Federal Court of Canada ruled in favor of the Canada Revenue Agency by denying the Company's request. The Company now considers the matter closed and does not plan any further action in this regard. There was no accounting charge related to this decision recorded in the three months ended June 30, 2013.

As of June 30, 2013, the Company had $55.3 million of gross deferred tax assets (after a $20.2 million valuation allowance) and net deferred tax assets (after deferred tax liabilities) of $52.4 million related to the U.S. and international tax jurisdictions whose recoverability is dependent upon future profitability which the Company believes is more-likely-than-not to occur.

The effective tax rate for the three and six months ended June 30, 2013 was 23.3% and 16.6%, respectively.The effective tax rate during these periods in 2013 was influenced by the distribution of earnings in international jurisdictions currently under an income tax holiday and the $3.8 million and $4.6 million, respectively, in restructuring and impairment expenses and the income tax benefit related to these incremental expenses.The effective tax rate for the three and six months ended June 30, 2012 was (25.6%) and 2.5%, respectively. The effective tax rate during these periods in 2012 was influenced by the distribution of earnings in international jurisdictions currently under an income tax holiday and the $17.3 million and $21.1 million, respectively, in restructuring and impairment expenses and the income tax benefit related to these incremental expenses.

The Company's U.S. income tax returns filed for the tax years ending December 31, 2009 to present, remain open tax years subject to IRS audit. The Company is currently under audit of income taxes in Canada. Although the outcome of examinations by taxing authorities are always uncertain, it is the opinion of management that the resolution of these audits will not have a material effect on the Company's Consolidated Financial Statements.