6. Income Taxes

The provision for income taxes consists of the following:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2011			2010		2011		2010
	(In thousands)
Current:
Federal	$	26		$	291	$	26	$	697
State and local		1,053			—		2,973		(32	)
Foreign		536			391		1,043		1,401

Total current provision		1,615			682		4,042		2,066

Deferred:
Federal		6,459			3,307		15,824		9,476
State and local		869			922		3,821		2,407
Foreign		(91	)		2		19		35

Total deferred provision		7,237			4,231		19,664		11,918

Provision for income taxes	$	8,852		$	4,913	$	23,706	$	13,984

The following is a summary of the Company’s net deferred tax assets:


	As of
	September 30, 2011			December 31, 2010
	(In thousands)
Deferred tax assets and liabilities	$	9,982		$	20,062
Valuation allowance		(393	)		(249	)

Deferred tax assets, net	$	9,589		$	19,813

In April 2000, the Board of Directors initiated a warrant program that commenced on February 1, 2001. Under this program, the Company reserved for issuance 5,000,002 shares of common stock. The warrants were issued to certain broker-dealer stockholders (the “Warrant Holders”). The Warrant Holders were entitled to purchase shares of common stock from the Company at an exercise price of $.003. The warrants were issued to the Warrant Holders at the time that they made an equity investment in the Company. Allocations were based on each Warrant Holder’s respective commissions as a percentage of the total commissions from the six participating Warrant Holders, calculated on a quarterly basis. The final share allocations under the warrant program occurred on March 1, 2004. Shares allocated under the warrant program were expensed on a quarterly basis at fair market value. All of the warrants were exercised prior to 2008. Through December 31, 2009, the tax benefit on a portion of the tax deduction generated on the exercise of the warrants had not yet been recorded. During 2010, the Company recognized a portion of the tax benefits amounting to $11.4 million as an increase to additional paid-in-capital due to the utilization of the related tax loss carryforwards of $31.0 million. During the first quarter of 2011, the Company recognized the remaining portion of the tax benefit, amounting to $4.2 million, as an increase to additional paid-in-capital due to the expected utilization of the related tax loss carryforwards of $10.4 million.

The Company or one of its subsidiaries files U.S. federal, state and foreign income tax returns. No income tax returns have been audited, with the exception of New York state (through 2006) and Connecticut state (through 2003) tax returns. An examination of the Company’s New York state franchise tax returns for 2007 through 2009 is currently underway. The Company cannot estimate when the examination will conclude.

During the first quarter of 2011, the Company reached a settlement for a reimbursement claim on previously paid sales tax amounting to approximately $0.7 million. This amount has been reflected as a reduction of general and administrative expenses in the Consolidated Statements of Operations.