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Income Taxes
6 Months Ended
Jun. 30, 2011
Income Taxes [Abstract]  
Income Taxes
8. Income Taxes
     For the three and six months ended June 30, 2011, the Company recorded income tax provisions of $9.2 million and $17.0 million, respectively, compared to $6.0 million and $9.6 million for the three and six months ended June 30, 2010, respectively. Income tax is related to federal, state, and foreign tax obligations. The increases in tax expense were primarily related to increases in profits.
     The Company’s effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction, and as a result of acquisitions.
     The Company enjoys the benefits of income tax holidays in certain jurisdictions in which it operates. Tax holidays for the Company’s business located in Bangalore and Noida, India expired on March 31, 2011. In addition, in 2009 the Company established a new India unit in a Special Economic Zone (“SEZ”) which is entitled to a five year, 100% tax holiday. Immediately following the expiration of the 100% tax holiday, the SEZ unit is entitled to a five year, 50% tax holiday.
     Deferred tax assets are to be reduced by a valuation allowance if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of June 30, 2011, certain state tax net operating loss carry forwards and a portion of the net operating loss carry forwards relating to certain stock-based compensation deductions remain with a valuation allowance recorded against them. Additionally, the Company maintains a valuation allowance against its deferred tax assets in Switzerland but believes that deferred tax assets in various other foreign jurisdictions are more likely than not to be realized, and therefore, no valuation allowance has been recorded against these assets.
     The Company had gross unrecognized tax benefits, including interest and penalties, of approximately $13.3 million as of June 30, 2011 and $12.0 million as of December 31, 2010. These balances represent the amount of unrecognized tax benefits that, if recognized, would result in a reduction of the Company’s effective tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of June 30, 2011 and December 31, 2010, accrued interest and penalties totaled approximately $1.2 million and $1.1 million, respectively.
     The Company conducts business globally and, as a result, its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world, including major jurisdictions such as Canada, Germany, India, the United Kingdom and the United States. The Company’s U.S. federal tax filings are open for examination for tax years 2007 through the present. The statutes of limitations in the Company’s other tax jurisdictions remain open for 2004 through the present. However, carry forward attributes from prior years may still be adjusted upon examination by tax authorities if they are used in a future period.
     Although the Company believes its tax estimates are appropriate, the final determination of tax audits could result in favorable or unfavorable changes in its estimates. The Company anticipates the settlement of tax audits in the next twelve months and the expiration of relevant statutes of limitations could result in a decrease in its unrecognized tax benefits of an amount between $0.5 million and $1.5 million.