Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes [Abstract]

Income Taxes

5. Income Taxes:

The total income tax provision for the three months ended March 31, 2012 and 2011 was $442 and $471, respectively. The Company generated pre-tax book income of $11,204 and $20,256 for the three months ended March 31, 2012 and 2011, respectively.

The Company's effective tax rate for the three months ended March 31, 2012 and 2011 was 3.9% and 2.3%, respectively. The effective tax rate during these periods was lower than the highest marginal tax rates due to the realization of deferred tax assets that were previously recorded. The net deferred tax assets, which are offset by a full valuation allowance, include net operating losses (NOLs), which are available to offset the current and future taxable income. The Company recorded an expected tax liability for these periods due to the expected alternative minimum taxes. Limitations prevent the Company from using its NOLs to fully offset its taxable income for alternative minimum tax purposes. The Company expects to realize an additional portion of the tax benefits of NOLs in 2012, which are reflected in the Company's projected effective tax rate for the year, along with a corresponding release of the valuation allowance previously recorded against these losses. The Company will continue to provide a valuation allowance against the other deferred tax assets to the extent the Company believes that it is more likely than not that the benefits will not be realized in the future. The Company will continue to assess the need for a valuation allowance at each reporting date.

The Company is subject to examination by the U.S. Internal Revenue Service (IRS), and other taxing authorities in jurisdictions where the Company has significant business operations, such as Virginia. During the three months ended March 31, 2012, the Company received a notification from the IRS related to the commencement of an IRS examination of the Company's tax years 2009 and 2010.