7. Income Taxes

The following table presents components of income tax expense/(benefit) for the three and nine months ended September 30, 2014 and 2013:

		Three months ended September 30,								Nine months ended September 30,
(in thousands)	2014				2013				2014			2013

Income tax based on income from continuing operations, at estimated tax rates of 34.9% and 41.0%, respectively		$	6,470			$	2,902			$	19,226		$	6,382
Provision for change in estimated tax rates			(243	)			170				-			-
Income tax before discrete items			6,227				3,072				19,226			6,382

Discrete tax expense/(benefit):
Provision for/adjustment to beginning of year valuation allowances			-				-				437			-
Provision for/resolution of tax audits and contingencies, net			330				-				1,310			425
Adjustments to prior period tax liabilities			205				(818	)			459			(734	)
Enacted legislation change			-				(269	)			-			(269	)
Repatriation of non-U.S. prior years' earnings			-				396				-			582
Other discrete tax adjustments, net			-				-				3			-
Total income tax expense/(benefit)		$	6,762			$	2,381			$	21,435		$	6,386

The third quarter estimated effective tax rate on continuing operations was 34.9 percent in 2014, as compared to 41.0 percent for the same period in 2013. The change in the estimated effective tax rate was primarily attributable to changes in the anticipated amount and distribution of income and loss among the countries in which we operate.

The Company records the residual U.S. and foreign taxes on certain amounts of current year foreign earnings that have been targeted for repatriation to the U.S. As a result, such amounts are not considered to be permanently reinvested, and the Company accrued as part of the income tax provision before discrete items, for the residual taxes on these earnings to the extent they cannot be repatriated in a tax-free manner. At September 30, 2014 the Company reported a deferred tax liability of $0.1 million on $3.6 million of prior year non-U.S. earnings that had been targeted for future repatriation to the U.S.

We conduct business globally and, as a result, the Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including major jurisdictions such as the United States, Brazil, Canada, France, Germany, Italy, Mexico, and Switzerland. The open tax years in these jurisdictions range from 2000 to 2013. We are currently under audit in the U.S. and in other non-U.S. tax jurisdictions, including but not limited to Canada, Germany, and Italy.

It is reasonably possible that over the next twelve months the amount of unrecognized tax benefits may change within a range of a net increase of $0 million to a net decrease of $2.6 million, from the reevaluation of uncertain tax positions arising in examinations, in appeals, or in the courts, or from the closure of tax statutes.

Not included in the range is $24 million of tax benefits in Germany related to a 1999 reorganization that have been challenged by the German tax authorities in the course of an audit. In 2008 the German Federal Tax Court (FTC) denied tax benefits to other taxpayers in a case involving German tax laws relevant to our reorganization. One of these cases involved a non-German party, and in the ruling in that case, the FTC acknowledged that the German law in question may be violative of European Union (EU) principles and referred the issue to the European Court of Justice (ECJ) for its determination on this issue. In September 2009, the ECJ issued an opinion in this case that is generally favorable to the other taxpayer and referred the case back to the FTC for further consideration. In May 2010 the FTC released its decision, in which it resolved certain tax issues that may be relevant to our audit and remanded the case to a lower court for further development. In 2012, the lower court decided in favor of the taxpayer and the government appealed the findings to the FTC. On July 2, 2014, The FTC conducted a hearing in the aforementioned case involving the other taxpayer, and the taxpayer lost. The final written decision of the FTC will be issued in the fourth quarter of 2014. Although we believe that the relevant German tax law is violative of EU principles, management views the conclusion of this case as an opportunity to approach the German tax authorities with the goal of a settlement agreement. We were required to pay tax and interest of approximately $13 million to the German tax authorities in order to pursue our appeal position. In anticipation of a settlement, a portion of the prepaid taxes and interest along with certain deferred tax assets were adjusted downward by $6 million during the third quarter of 2014, which is included in Provision for/resolution of tax audits and contingencies in the above table. Also included on that line, for the third quarter of 2014, is a tax benefit related to the lapse of a tax statute.