Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Taxes

Note 4. Income Taxes

The effective tax rate for the three and six months ended June 30, 2011 was 41%, which was 2% higher than the expected effective tax rate primarily due to the amortization of previous losses from accumulated other comprehensive income (“OCI”) to income (for book purposes) related to the Company’s previous interest rate swaps that were terminated in December 2010 and a change in unrecognized tax benefits during the quarter resulting from a state tax audit. The effective tax rate for the three months ended June 30, 2010 was -27%, representing income tax expense on a net loss; this result was also primarily due to the amortization of previous losses from accumulated OCI related to the previous interest rate swaps and a change in unrecognized tax benefits during the quarter resulting from an IRS examination. The effective tax rate for the six months ended June 30, 2010 was 6%, which was 19% less than the 2010 expected effective tax rate of 25% as a result of the same factors causing the difference in the three months ended June 30, 2010. The amortization had a larger impact on the effective tax rate in the 2010 periods because the amortization was larger in 2010, and because the magnitude of the estimated expected full year pre-tax income (loss) was smaller for 2010.

As of June 30, 2011, the Company had unrecognized tax benefits totaling approximately $5.3 million, all of which would favorably impact its effective tax rate if subsequently recognized. The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. Accrued interest and penalties as of June 30, 2011 were approximately $1.9 million. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. The Company anticipates that the total amount of unrecognized tax benefits may decrease by approximately $3.8 million during the next twelve months, which should not have a material impact on the Company’s financial statements.

Certain of the Company’s subsidiaries are currently under examination by Federal and various state jurisdictions for years ranging from 1997 to 2009. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company’s effective tax rate. Periods subsequent to 2009 remain subject to examination.