Income Taxes

The provision for income taxes for 2013 and 2012 are computed at the effective rate expected to be applicable in each respective full year using the statutory rates on a country by country basis, adjusted for changes in valuation allowances relating to the Company’s net operating loss and capital loss carryforwards and changes in tax uncertainties. The effective rates for the three month periods ended September 27, 2013 and September 28, 2012, were a benefit of 411.8% and a benefit of 64.3%, respectively.

The effective rate for the three months ended September 27, 2013 differed from the U.S. statutory rate primarily due to the reversal of an uncertain tax position as a result of the expiration of statute of limitations discussed in the tax uncertainties section below. Other factors impacting the effective rate include state income taxes, lower tax rates of our foreign operations as compared to the U.S. federal rates, and recognition of valuation allowances related to current year losses in the UK and in U.S. federal and state jurisdictions.

The effective rate for the three months ended September 28, 2012 differed from the U.S. statutory rate primarily due to state income taxes, lower tax rates of our foreign operations as compared to the U.S. federal rates, and recognition of valuation allowances related to net losses in the UK and in U.S. federal and state jurisdictions.

The effective tax rates for the nine month periods ended September 27, 2013 and September 28, 2012, were a benefit of 48.5% and a benefit of 3.3%, respectively.

The effective rate for the nine months ended September 27, 2013 differed from the U.S. statutory rate due to the reversal of various uncertain tax positions, primarily relating to the expiration of certain statutes of limitations. Other factors impacting the effective rate include state income taxes, lower tax rates of our foreign operations as compared to the U.S. federal rates, and valuation allowances related to current year losses in the UK and in U.S. federal and state jurisdictions.

The effective rate for the nine months ended September 28, 2012 differed from the U.S. statutory rate primarily due to state income taxes, lower tax rates of our foreign operations as compared to the U.S. federal rates, and valuation allowances related to net losses in the UK and in U.S. federal and state jurisdictions.

Tax uncertainties

On September 27, 2013 and December 31, 2012, the gross amount of unrecognized tax benefits was $2.2 million and $11.2 million, respectively, exclusive of interest and penalties. As of September 27, 2013 and December 31, 2012, if we were to prevail on all unrecognized tax benefits, $2.2 million and $11.2 million, respectively, would have benefited the effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of operations. As of September 27, 2013 and December 31, 2012, the Company had $0.2 million and $3.3 million, respectively, of accrued interest and penalties. Interest and penalties recognized in the three months ended September 27, 2013 and September 28, 2012 were a benefit of $3.3 million and expense of $0.1 million, respectively. Interest and penalties recognized in the nine months ended September 27, 2013 and September 28, 2012 were a benefit of $3.1 million and expense of $0.3 million, respectively.

During the three months ended September 27, 2013, the statute of limitations expired for an uncertain tax position taken in a prior year. As a result, the Company recognized $9.0 million in previously unrecognized tax benefit and an additional $3.4 million related to the reversal of accrued interest and penalties associated with the position during the current quarter. During the next 12 months, the Company does not expect to have any significant reversal of gross unrecognized tax benefits. The Company files income tax returns in the U.S. federal and state and local jurisdictions, and in the UK, Canada, the Netherlands, and France. Under the generally accepted statute of limitation rules, the Company is not subject to changes in income taxes by any taxing jurisdiction for years prior to 2010.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for the nine months ended September 27, 2013 is as follows:



	September 27, 2013
	(in thousands)
Balance, beginning of period	$	(11,209	)
Reductions for tax positions of prior years	9,105
Effects of foreign currency translation	(53		)
Balance, end of period	$	(2,157	)