INCOME TAXES

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements [Abstract]

INCOME TAXES

NOTE 11 – INCOME TAXES

The Company uses an estimated annual effective tax rate in determining its interim provision for income taxes.  The methodology employed is based on the Company’s expected annual income, statutory tax rates and tax strategies utilized in the various jurisdictions in which it operates.

During the fourth quarter of 2010, the Company fully reserved its deferred tax assets as it concluded that it is more likely than not that its deferred tax assets would not be utilized.  The Company continually assesses the necessity of maintaining a valuation allowance for its deferred tax assets.  If the Company determines in a future period that it is more likely than not that the deferred tax assets will be utilized, the Company will reverse all or part of the valuation allowance.

Income tax benefit for the three months ended June 30, 2011 was $0.3 million on pre-tax net loss of $2.7 million.  As mentioned above, the Company maintains a valuation allowance against its deferred tax assets.  The effective tax rate was less than the statutory rate due to an increase in the Company’s valuation allowance.   The Company’s income tax expense was $2.2 million with an effective tax rate of 41.5%, for the three months ended June 30, 2010.  The effective tax rate was greater than the statutory rate due to state income taxes and other permanent differences.

Income tax benefit for the six months ended June 30, 2011 was $0.1 million on pre-tax net income of $0.5 million.  The effective tax rate was less than the statutory rate due to a reduction in the Company’s valuation allowance to offset the tax expense generated by the year to date earnings.   The Company’s income tax benefit was $0.1 million for the six months ended June 30, 2010.  The effective tax rate was less than the statutory rate due to certain non-deductible CHS acquisition related costs which were treated as a discrete item for tax purposes. 

The Company files income tax returns, including returns for its subsidiaries, with Federal, state and local jurisdictions.  The Company's uncertain tax positions are related to tax years that remain subject to examination.  As of June 30, 2011, U.S. tax returns for 2007 through 2010 remain subject to examination by Federal tax authorities.  Tax returns for the years 2006 through 2010 remain subject to examination by state and local tax authorities for a majority of the Company's state and local filings.