NOTE 3:

INCOME TAXES

For the three months ended September 30, 2015, taxes were a $0.2 million benefit on a $0.1 million pre-tax loss due to a return to provision adjustment, resulting in an effective tax rate of 175.5%. For the nine months ended September 30, 2015, the Company’s effective tax rate was 24.5%. For the three and nine months ended September 30, 2014, the Company’s effective income tax rate was 27.6% and 48.0%, respectively. For these periods, the Company’s effective tax rate was determined based on the estimated annual effective tax rate.

The effective tax rate for the three months ended September 30, 2015 was higher than what would have been expected if the federal statutory rate were applied to income before taxes. Items increasing the effective tax rate include a return to provision adjustment offset by favorable rate differences from foreign jurisdictions and the utilization of foreign income tax credit. The effective tax rate for the three months ended September 30, 2014 was lower than what would have been expected if the federal statutory rate were applied to income before taxes. Items decreasing the effective income tax rate included favorable rate differences from foreign jurisdictions due to the overall profitability improvement during this period.

The effective tax rate for the nine months ended September 30, 2015 was lower than what would have been expected if the federal statutory rate were applied to income before taxes. Items decreasing the effective income tax rate include the favorable rate differences from foreign jurisdictions due to the overall profitability and the utilization of foreign income tax credit. The effective tax rate for the nine months ended September 30, 2014 was higher than what would have been expected if the federal statutory rate were applied to income before taxes. Items increasing the effective income tax rate included the change in the valuation allowances associated with certain deferred tax assets and subpart F income resulting from controlled foreign corporation operations.