CONTINGENCIES

6 Months Ended

Jun. 30, 2012

CONTINGENCIES

CONTINGENCIES

NOTE 9—CONTINGENCIES

        During the six months ended June 30, 2012 and 2011, provisions for litigation settlements and contingencies of $0.4 million and $5.0 million, respectively, were recorded in litigation settlements and contingencies in the accompanying consolidated statements of operations. The balance of the related liability was $0.5 million and $3.1 million at June 30, 2012 and December 31, 2011, respectively. The litigation matters were either settled, or we extended a firm offer for settlement, thereby establishing an accrual amount that is both probable and reasonably estimable.

        In the ordinary course of business, we are party to various lawsuits. We establish reserves for specific legal matters when we determine that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Management has also identified certain other legal matters where it believes an unfavorable outcome is not probable and, therefore, no reserve is established. We also evaluate other contingent matters, including tax contingencies, to assess the probability and estimated extent of potential loss.

        The North Carolina Department of Revenue conducted an examination of our North Carolina franchise tax returns for the years ended December 31, 2006 through 2008, and issued final audit reports to us in 2011. As of December 31, 2011, we evaluated this matter as a potential loss contingency, and determined that it was reasonably possible that a loss could be incurred. The range of a possible loss was estimated to be $-0- to $3.6 million. No reserve was established for this matter as we had determined that the likelihood of a loss was not probable. In July 2012, the North Carolina Department of Revenue issued amended audit reports to us confirming no further taxes are due.