Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

12. Income Taxes

Until the fourth quarter of 2010, we maintained a 100% valuation allowance against our net deferred tax assets except with regard to the deferred tax assets related to AMT credit carryforwards. During the fourth quarter of 2010, we determined, based on all available evidence, that it was more likely than not that we would realize the benefit from a significant portion of our deferred tax assets in the future, and therefore, a full valuation allowance was no longer required. Accordingly, we reversed a substantial portion of the valuation allowance as a deferred income tax benefit and reduced the valuation allowance as of December 31, 2010 to $11.2 million. At September 30, 2011, we maintained a valuation allowance against our deferred tax assets for certain tax credit and loss carryovers due to the limited carryforward periods and character of such attributes and will continue to maintain such valuation allowance until sufficient positive evidence exists to support its full or partial reversal.

For the nine months ended September 30, our income tax provision is summarized as follows: (i) for 2011, we recorded a current tax provision of $17.4 million (which included a provision of $14.5 million to increase our liability for uncertain tax positions (“UTPs”) ) and a deferred tax provision of $35.6 million (which included a benefit of $16.5 million for UTPs), resulting in a total provision of $53.0 million on pre-tax income of $80.2 million and (ii) for 2010, we recorded a current tax provision of $8.6 million to increase our liability for UTPs and a deferred tax provision of $3.6 million (which included a provision of $4.6 million for UTPs), resulting in a total provision of $12.2 million on a pre-tax income of $54.1 million.

As of September 30, 2011, we had unrecognized tax benefits relating to UTPs of $108 million. The Company recognizes potential accrued interest and penalties related to UTPs in income tax expense on a quarterly basis. As of September 30, 2011, we have accrued approximately $27.8 million and $24.0 million for the payment of potential tax-related interest and penalties, respectively.

With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years prior to 2006. Earlier years related to certain foreign jurisdictions remain subject to examination. Various state and foreign income tax returns are currently under examination. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses were generated and carried forward, and make adjustments up to the amount of the net operating loss carryforward. While we intend to contest any future tax assessments for uncertain tax positions, no assurance can be provided that we would ultimately prevail. During the next twelve months, the statute of limitations for assessment of additional tax will expire with regard to several of our federal and state income tax returns filed for 2005, 2006 and 2007, potentially resulting in a $27.5 million reduction to our unrecognized tax benefits.

The following summarizes the changes to our liabilities for UTPs included in long-term liabilities and net deferred tax assets in the condensed consolidated balance sheets:

	Nine Months
	Ended September 30,
	2011			2010
	(In thousands)
Liabilities for UTPs:
Opening balance — January 1	$	122,857		$	111,316
Current provision (benefit) for:
Unrecognized tax benefits		12,821			4,241
Potential additional interest		4,431			4,365
Potential additional penalties		1,872			667
Statute expirations		(1,382	)		(698	)
Tax settlements		(3,259	)		—
Ending balance — September 30 (included in long-term liabilities)		137,340			119,891
UTP adjustment to net deferred tax assets:
Opening balance — January 1		(13,920	)		239
Current change for unrecognized tax benefits		(16,503	)		4,582
Ending balance — September 30 (included in net deferred tax assets)		(30,423	)		4,821
Total uncertain tax positions	$	106,917		$	124,712

As of September 30, 2011, if our positions are sustained by the taxing authorities, approximately $107 million would reduce the Company’s future income tax provisions. Other than as described above, there were no significant changes to our uncertain tax positions during the nine months ended September 30, 2011 and 2010, and we do not anticipate any other significant changes to our unrecognized tax benefits during the next twelve months.