Income Taxes

9 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Abstract]

Income Taxes

(3) Income Taxes

The Company’s provision for income taxes consists of federal, state and local, and foreign taxes, as applicable, in amounts necessary to align the Company’s year-to-date tax provision with the effective rate that it expects to achieve for the full year.  The Company’s 2011 annual effective tax rate (excluding discrete items) is estimated to be approximately (5.6%) based upon its anticipated results both in the U.S. and in its foreign subsidiaries.

For the nine months ended September 30, 2011, the Company recorded an income tax provision of $0.9 million on its pre-tax loss of $16.4 million, consisting of primarily state and local and foreign taxes. During the third quarter of 2010, the Company concluded that its domestic deferred tax assets were no longer realizable on a more-likely-than-not basis and, therefore, recorded a full valuation allowance against its domestic deferred tax assets. During the nine months ended September 30, 2011, the Company’s conclusion did not change with respect to its domestic deferred tax assets and, therefore, the Company has not recorded any benefit for its expected net domestic deferred tax assets for the full year 2011estimated annual effective tax rate. As of September 30, 2011, the valuation allowance totaled approximately $32.6 million. In addition, the Company also recorded an accrual for certain legal matters during the nine months ended September 30, 2011 which the Company believes will be non-deductible for US income tax purposes. The tax impact related to this accrual was recorded as a discrete item during the nine months ended September 30, 2011.

For the nine months ended September 30, 2010, the Company recorded an income tax provision of $17.0 million. During the third quarter of 2010, the Company concluded that it could no longer realize its domestic deferred tax assets on a more-likely-than-not basis. As a result, the income tax provision for the nine months ended September 30, 2010 did not provide for any tax benefit for the then current year domestic pre-tax loss and included a discrete item of $16.2 million related to an increase in a valuation allowance for the deferred tax assets previously recognized.

The Company’s total unrecognized tax benefits as of September 30, 2011 and December 31, 2010 were approximately $5.4 million and $5.2 million, respectively, which if recognized, would affect the Company’s effective tax rate. As of September 30, 2011 and December 31, 2010, the Company recorded an aggregate of approximately $207,000 and $114,000, respectively, of accrued interest and penalties.