Provision for Income Taxes	9 Months Ended
Sep. 30, 2015
Provision for Income Taxes
Provision for Income Taxes	9.Provision for Income Taxes The Company accounts for income taxes using the asset and liability approach by recognizing deferred tax assets and liabilities for the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which the differences are expected to be reflected in the tax return. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In addition, the Company accounts for uncertain tax positions that have reached a minimum recognition threshold. The income tax provision for the three months ended September 30, 2015 and 2014 was $10.7 million and $2.7 million, respectively, representing effective tax rates of 45.3% and 30.0%, respectively. The increase in our effective tax rate for the three months ended September 30, 2015, when compared to the same period in 2014, was primarily caused by changes in the expected mix of earnings among tax jurisdictions, including an expected decrease in U.S. income as a result of the continued weakness in the industrial markets, which is taxed at a lower effective tax rate because of a valuation allowance. This was partly offset by the release of a valuation allowance on net operating loss carryforwards. The income tax provision for the nine months ended September 30, 2015 and 2014 was $17.8 million and $24.7 million, respectively, representing effective tax rates of 29.3% and 42.7%, respectively. The decrease in our effective tax rate for the nine months ended September 30, 2015, when compared to the same period in 2014, was caused primarily by the release of a valuation allowance on net operating loss carryforwards, offset by changes in the expected mix of earnings among tax jurisdictions, including a decrease in expected U.S. earnings noted above. Utilization of the loss carryforwards resulted from the move of certain production from the United States to Switzerland and Germany. The Company’s effective tax rate may change over time as the amount or mix of income and taxes changes among the jurisdictions in which the Company is subject to tax. As of September 30, 2015 and December 31, 2014, the Company has unrecognized tax benefits, excluding penalties and interest, of approximately $28.6 million and $27.0 million, respectively, of which $14.8 million and $12.8 million, if recognized, would result in a reduction of the Company’s effective tax rate. The Company recognizes penalties and interest related to unrecognized tax benefits in the provision for income taxes. As of September 30, 2015 and December 31, 2014, approximately $4.9 million and $3.6 million, respectively, of accrued interest and penalties related to uncertain tax positions was included in other long-term liabilities on the unaudited condensed consolidated balance sheets. No penalties and interest related to unrecognized tax benefits were recorded in the provision for income taxes during the three months ended September 30, 2015. Penalties and interest related to unrecognized tax benefits of $1.1 million were recorded in the provision for income taxes during the nine months ended September 30, 2015. Penalties and interest related to unrecognized tax benefits of $0.2 million were recorded in the provision for income taxes during the three and nine months ended September 30, 2014. The Company files tax returns in the United States, which include federal, state and local jurisdictions, and many foreign jurisdictions with varying statutes of limitations. The Company considers Germany, the United States and Switzerland to be its significant tax jurisdictions. The tax years 2009 to 2014 are open tax years in Germany and Switzerland. During the nine months ended September 30, 2014, the Company settled a tax audit in the United States for the tax year 2010. The amount of the settlement was immaterial to the condensed consolidated financial statements. Tax years 2011 to 2014 remain open for examination in the United States. Subsequent to September 30, 2015, we approved and implemented a repatriation of $235.3 million of foreign earnings to the United States due to adverse interest rate conditions in Europe that were unfavorably impacting cash balances. The Company used $129.5 million of the repatriated funds to repay the outstanding balance on the revolving credit line under the Amended Credit Agreement. No incremental U.S. income tax is expected to be incurred as the majority of the repatriation was comprised of previously taxed income and the Company has sufficient net operating losses and foreign tax credits to offset any remaining tax liability. The Company regularly evaluates the need for a valuation allowance on its deferred tax assets in accordance with the Accounting Standards Codification (ASC) Topic 740-10-30-17. Given the repatriation’s impact on U.S. pretax book income for 2015, the Company will consider this new evidence, together with all available evidence, in evaluating its existing valuation allowances on its U.S. deferred tax assets in the fourth quarter of 2015. The Company has previously asserted that its foreign earnings are indefinitely reinvested and this repatriation does not change this ongoing assertion due to the Company’s ability in this instance to remit these earnings on a tax free basis in a manner that is solely within its control and presently available to the Company. The Company regularly evaluates its assertion that its foreign earnings are indefinitely reinvested. If the cash, cash equivalents and short-term investments held by the Company’s foreign subsidiaries are needed to fund operations in the U.S., or the Company otherwise elects to repatriate the unremitted earnings of its foreign subsidiaries in the form of dividends or otherwise, or if the shares of the subsidiaries were sold or transferred, the Company would likely be subject to additional U.S. income taxes, net of the impact of any available tax credits, which could result in a higher effective tax rate in the future.

9.Provision for Income Taxes

The Company accounts for income taxes using the asset and liability approach by recognizing deferred tax assets and liabilities for the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which the differences are expected to be reflected in the tax return. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In addition, the Company accounts for uncertain tax positions that have reached a minimum recognition threshold.

The income tax provision for the three months ended September 30, 2015 and 2014 was $10.7 million and $2.7 million, respectively, representing effective tax rates of 45.3% and 30.0%, respectively. The increase in our effective tax rate for the three months ended September 30, 2015, when compared to the same period in 2014, was primarily caused by changes in the expected mix of earnings among tax jurisdictions, including an expected decrease in U.S. income as a result of the continued weakness in the industrial markets, which is taxed at a lower effective tax rate because of a valuation allowance. This was partly offset by the release of a valuation allowance on net operating loss carryforwards. The income tax provision for the nine months ended September 30, 2015 and 2014 was $17.8 million and $24.7 million, respectively, representing effective tax rates of 29.3% and 42.7%, respectively. The decrease in our effective tax rate for the nine months ended September 30, 2015, when compared to the same period in 2014, was caused primarily by the release of a valuation allowance on net operating loss carryforwards, offset by changes in the expected mix of earnings among tax jurisdictions, including a decrease in expected U.S. earnings noted above. Utilization of the loss carryforwards resulted from the move of certain production from the United States to Switzerland and Germany. The Company’s effective tax rate may change over time as the amount or mix of income and taxes changes among the jurisdictions in which the Company is subject to tax.

As of September 30, 2015 and December 31, 2014, the Company has unrecognized tax benefits, excluding penalties and interest, of approximately $28.6 million and $27.0 million, respectively, of which $14.8 million and $12.8 million, if recognized, would result in a reduction of the Company’s effective tax rate. The Company recognizes penalties and interest related to unrecognized tax benefits in the provision for income taxes. As of September 30, 2015 and December 31, 2014, approximately $4.9 million and $3.6 million, respectively, of accrued interest and penalties related to uncertain tax positions was included in other long-term liabilities on the unaudited condensed consolidated balance sheets. No penalties and interest related to unrecognized tax benefits were recorded in the provision for income taxes during the three months ended September 30, 2015. Penalties and interest related to unrecognized tax benefits of $1.1 million were recorded in the provision for income taxes during the nine months ended September 30, 2015. Penalties and interest related to unrecognized tax benefits of $0.2 million were recorded in the provision for income taxes during the three and nine months ended September 30, 2014.

The Company files tax returns in the United States, which include federal, state and local jurisdictions, and many foreign jurisdictions with varying statutes of limitations. The Company considers Germany, the United States and Switzerland to be its significant tax jurisdictions. The tax years 2009 to 2014 are open tax years in Germany and Switzerland. During the nine months ended September 30, 2014, the Company settled a tax audit in the United States for the tax year 2010. The amount of the settlement was immaterial to the condensed consolidated financial statements. Tax years 2011 to 2014 remain open for examination in the United States.

Subsequent to September 30, 2015, we approved and implemented a repatriation of $235.3 million of foreign earnings to the United States due to adverse interest rate conditions in Europe that were unfavorably impacting cash balances. The Company used $129.5 million of the repatriated funds to repay the outstanding balance on the revolving credit line under the Amended Credit Agreement. No incremental U.S. income tax is expected to be incurred as the majority of the repatriation was comprised of previously taxed income and the Company has sufficient net operating losses and foreign tax credits to offset any remaining tax liability. The Company regularly evaluates the need for a valuation allowance on its deferred tax assets in accordance with the Accounting Standards Codification (ASC) Topic 740-10-30-17. Given the repatriation’s impact on U.S. pretax book income for 2015, the Company will consider this new evidence, together with all available evidence, in evaluating its existing valuation allowances on its U.S. deferred tax assets in the fourth quarter of 2015.

The Company has previously asserted that its foreign earnings are indefinitely reinvested and this repatriation does not change this ongoing assertion due to the Company’s ability in this instance to remit these earnings on a tax free basis in a manner that is solely within its control and presently available to the Company. The Company regularly evaluates its assertion that its foreign earnings are indefinitely reinvested. If the cash, cash equivalents and short-term investments held by the Company’s foreign subsidiaries are needed to fund operations in the U.S., or the Company otherwise elects to repatriate the unremitted earnings of its foreign subsidiaries in the form of dividends or otherwise, or if the shares of the subsidiaries were sold or transferred, the Company would likely be subject to additional U.S. income taxes, net of the impact of any available tax credits, which could result in a higher effective tax rate in the future.