INCOME TAXES

9 Months Ended

Sep. 30, 2012

INCOME TAXES

INCOME TAXES

NOTE 8—INCOME TAXES

For the three months ended September 30, 2012 and 2011, we recorded a tax (provision) benefit of $(0.2) million and $0.5 million, respectively, which represents effective tax rates of 41.1% and 12.0%, respectively. For the nine months ended September 30, 2012 and 2011, we recorded a tax benefit of $3.1 million and $12.1 million, respectively, which represents effective tax rates of 39.4% and 21.3%, respectively. For the three and nine months ended September 30, 2012, our tax rate is higher than the federal statutory rate of 35% primarily due to the impact of state income taxes. For the three months ended September 30, 2011, our tax rate was lower than the federal statutory rate of 35% due to a change in the valuation allowance on deferred tax assets.  For the nine months ended September 30, 2011, our tax rate was lower than the federal statutory rate of 35% due to a change in the valuation allowance on deferred tax assets, partially offset by the tax impact of an impairment charge related to an intangible asset.

For the three and nine months ended September 30, 2012 and 2011, we used the standard method of calculating a projected annual tax rate to determine the current period’s tax provision. We are recognizing the tax effect of discontinued operations discretely in the respective interim periods and in accordance with the intra-period accounting rules. An offsetting tax benefit is recorded in continuing operations in the interim period.