Income Taxes

Effective Tax Rates

The Company's effective tax rates attributable to income from continuing operations are as follows:



	2013	2012
Three months ended June 30,	32.9%	31.7%
Six months ended June 30,	30.6%	30.2%

The Company's effective tax rates attributable to income from continuing operations for both the three and six months ended June 30, 2013 are higher than the prior year's comparable periods primarily due to income earned in jurisdictions with higher statutory tax rates and certain statutorily non-deductible expenses, partially offset by the U.S. federal research credit, which had lapsed during 2012, and a greater U.S. federal tax benefit related to domestic manufacturing activities.

The Company's effective tax rates attributable to continuing operations for the three and six months ended June 30, 2013 are lower than the statutory U.S. federal tax rate of 35% primarily as a result of income earned in jurisdictions with tax rates lower than the U.S. statutory rate, the U.S. federal tax benefit for domestic manufacturing activities and the U.S. federal research credit. These items are partially offset by net U.S. state taxes, and certain statutorily non-deductible expenses.

Unrecognized Tax Benefits

During the three and six months ended June 30, 2013, the Company's gross unrecognized tax benefits increased by $1.5 million and $3.3 million, respectively, primarily as a result of tax positions taken in both the current and prior periods. During the three and six months ended June 30, 2013, the total amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate increased by $1.6 million and $3.4 million, respectively.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of its income tax expense. During the three and six months ended June 30, 2013, the Company recognized $0.3 million and $0.5 million, respectively, of interest and penalty expense related to unrecognized tax benefits in its condensed consolidated statements of operations. At June 30, 2013 and December 31, 2012, the Company had recorded $1.5 million and $1.0 million, respectively of accrued interest and penalty expense related to unrecognized tax benefits in its condensed consolidated balance sheets.

During the next twelve months, it is reasonably possible that the Company's unrecognized tax benefits may decrease by approximately $0.3 million due to a combination of tax positions expected to be taken during the remainder of the current year, the expiration of the statute of limitations on assessment, and settlements with tax authorities.

Income Tax Examinations

The Company's income tax returns are subject to examination by U.S. federal, U.S. state and local, and non-U.S. tax authorities. The Internal Revenue Service (“IRS”) has completed its examinations of the Company's consolidated U.S. federal income tax returns through 2008. The Company's consolidated U.S. federal income tax returns for 2009 through 2011, together with those filed by acquired subsidiaries, remain open to examination.

With few exceptions, the Company is no longer subject to U.S. state and local or non-U.S. income tax examinations for years before 2008. As of June 30, 2013, the Company and its subsidiaries are under examination in various jurisdictions, including Germany (2006 through 2009), Hungary (2009 and 2010), and California (2007 and 2008). In addition, the Company's appeal of certain Canadian tax assessments (2007 through 2009) is on-going. Overall, the Company believes that adequate accruals have been provided for all jurisdictions' open years.