7. Income taxes

We recognized a tax provision of $2.0 million on pretax net income of $11.4 and $9.1 million during the three months ended June 30, 2013 and 2012, respectively. We recognized a tax provision of $0.3 and $4.1 million on pretax net income of $18.0 and $17.3 million during the six months ended June 30, 2013 and 2012, respectively. The provision for income taxes before discrete items reflected in the table below was $2.4 and $2.6 million during the three months ended June 30, 2013 and 2012, respectively, and $4.3 and $5.2 million during the six months ended June 30, 2013 and 2012, respectively. The decrease in the provision for income taxes before discrete items for the three and six months ended June 30, 2013, compared with the same periods in the prior year, is due primarily to the tax benefit related to the U.S. federal research and development credit recognized only in 2013.

Primary differences between our recorded tax provision rate and the U.S. statutory rate of 35% include tax benefits related to credits for research and development costs in 2013, lower taxes on permanently reinvested foreign earnings, and the tax effects of stock-based compensation expense pursuant to ASC 718-740, Stock Compensation – Income Taxes, which are non-deductible for tax purposes. Pursuant to the American Taxpayer Relief Act of 2012, on January 2, 2013, we recognized a tax benefit of $3.2 million resulting from the renewal of the U.S. federal research and development tax credit retroactive to 2012. ASC 740-10-45-15, Income Taxes, requires that the effects of a change in tax law or rates be recognized in the period that includes the enactment date.

Our tax provision before discrete items is reconciled to our recorded provision for income taxes for the three and six months ended June 30, 2013 and 2012 as follows (in millions):


	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Provision for income taxes before discrete items	$	2.4		$	2.6		$	4.3		$	5.2
Interest related to unrecognized tax benefits		0.1			0.1			0.2			0.2
Provision related to reassessment of taxes resulting from the filing of prior year foreign tax returns		—			—			0.3			—
Benefit related to restructuring and other expenses		(0.1	)		(0.3	)		(0.7	)		(0.6	)
Benefit related to the 2012 U.S. federal research and development tax credit		—			—			(3.2	)		—
Tax deductions related to ESPP dispositions		(0.1	)		(0.1	)		(0.3	)		(0.4	)
Benefit related to reversals of uncertain tax positions due to statute of limitation expirations		(0.3	)		(0.3	)		(0.3	)		(0.3	)


Provision for income taxes	$	2.0		$	2.0		$	0.3		$	4.1

As of June 30, 2013 and December 31, 2012, the gross unrecognized tax benefits were $33.8 and $29.8 million, respectively, which would affect the effective tax rate, if recognized. Over the next twelve months, our existing tax positions will continue to generate an increase in liabilities for unrecognized tax benefits. It is reasonably possible that our gross unrecognized tax benefits will decrease up to $4.0 million in the next twelve months. These adjustments, if recognized, would positively impact our effective tax rate, and would be recognized as additional tax benefits in our condensed consolidated statement of operations.

We recognize potential accrued interest and penalties related to unrecognized tax benefits as a component of the income tax provision. As of June 30, 2013 and December 31, 2012, we accrued $1.5 and $1.2 million, respectively, for potential payments of interest and penalties.

As of June 30, 2013, we were subject to examination by the Internal Revenue Service for the 2009-2012 tax years, state tax jurisdictions for the 2008-2012 tax years, and the Netherlands tax authority for the 2010-2012 tax years.