INCOME TAXES

6 Months Ended

Jun. 30, 2011

INCOME TAXES

9. INCOME TAXES

The Company’s provision for income taxes was $6.8 million and $11.5 million for the six months ended June 30, 2011 and 2010, respectively. These amounts reflect effective tax rates of 37.4% and 12.6% for the six months ended June 30, 2011 and 2010, respectively. The Company’s effective tax rate of 37.4% for the six months ended June 30, 2011 reflects the Company’s estimate of the annual effective tax rate. During the six months ended June 30, 2010, the Company had a gain on the change in the embedded derivative liability which resulted in a decrease on the Company’s effective tax rate. As a result of the Company’s initial public offering in December 2010 the embedded derivative liability associated with the preferred stock was settled. Accordingly, there was no comparable impact during the six months ended June 30, 2011.

Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. The Company’s net deferred tax assets are included in Other assets on the Condensed Consolidated Balance Sheet.

The following table reconciles the Company’s provision to the U.S. federal statutory income tax rate for the periods indicated:

	Six Months Ended
	June 30, 2011			June 30, 2010
Federal income tax at statutory rate		35.00	%		35.00	%
Increase/(decrease) in taxes resulting from:
State income tax		2.40	%		1.16	%
Embedded derivative		0.00	%		(23.23	)%
Foreign rate differential		(0.02	)%		(0.22	)%
Meals & entertainment		0.15	%		0.04	%
R&D credit		(0.72	)%		0.00	%
Other permanent differences		0.60	%		(0.11	)%
Effective Tax Rate		37.41	%		12.64	%