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Income Taxes
9 Months Ended
Sep. 30, 2011
Income Taxes [Abstract] 
Income Taxes
Note 4. Income Taxes
The Company’s effective tax rate for the three months ended September 30, 2011 was 39%. The Company’s effective tax rate for the nine months ended September 30, 2011 was 40%, which was 1% higher than the normalized effective tax rate primarily due to the amortization of previous losses from accumulated other comprehensive income (loss) (“OCI”) to income (for book purposes) related to the Company’s previous interest rate swaps that were terminated in December 2010, partially offset by a favorable change in unrecognized tax benefits during the period resulting from the conclusion of our federal tax audit as well as a state tax audit. The Company’s effective tax rate for the three months ended September 30, 2010 was 152%, which was significantly more than the 2010 expected effective tax rate of 26% resulting primarily from 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 Company’s effective tax rate for the nine months ended September 30, 2010 was 2%, which was significantly less than the 2010 expected effective tax rate of 26% as a result of the same factors causing the difference in the three months ended September 30, 2010. The amortization of swap losses 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 September 30, 2011, the Company had unrecognized tax benefits totaling approximately $3.0 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 September 30, 2011 were approximately $0.8 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 $1.4 million during the next twelve months, which should not have a material impact on the Company’s financial statements.
The Company, including its subsidiaries, during the third quarter of 2011 concluded its United States federal income tax examination, including appeals, for 2005, 2006 and the short period ending May 2007. The Company is no longer subject to United States federal income tax examinations for years prior to 2008. The Company is currently under examination by various other state jurisdictions for years ranging from 2005 to 2010. 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. The Company is no longer subject to state income tax examinations for years before 2005.