INCOME TAXES

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements [Abstract]

INCOME TAXES

NOTE 11 – INCOME TAXES

The Company uses an estimated annual effective tax rate in determining its interim provision for income taxes.  The methodology employed is based on the Company’s expected annual income, statutory tax rates and tax strategies utilized in the various jurisdictions in which it operates.

During the fourth quarter of 2010, the Company fully reserved its deferred tax assets as it concluded that it is more likely than not that its deferred tax assets would not be utilized.  The Company continually assesses the necessity of maintaining a valuation allowance for its deferred tax assets.  If the Company determines in a future period that it is more likely than not that the deferred tax assets will be utilized, the Company will reverse all or part of the valuation allowance.

Income tax expense for the three months ended September 30, 2011 was $0.3 million on pre-tax net income of $0.9 million.  As mentioned above, the Company maintains a valuation allowance against its deferred tax assets.  The effective tax rate for 2011 was less than the statutory rate due to the Company’s valuation allowance that is maintained against its deferred tax assets.   Amounts recorded as expense in the quarter also include the tax effect of the amortization of indefinite-lived goodwill and intangibles.  The Company’s income tax expense was $2.1 million for the three months ended September 30, 2010.  The effective tax rate for 2010 was greater than the statutory rate due to state income taxes and other permanent differences.

Income tax expense for the nine months ended September 30, 2011 was $0.2 million on pre-tax net income of $1.4 million.  The effective tax rate for 2011 was less than the statutory rate due to the Company’s valuation allowance that is maintained against its deferred tax assets.  Amounts recorded as expense in the nine month period ended September 30, 2011 also include the tax effect of the amortization of indefinite-lived goodwill and intangible which was recorded on the basis of expected pre-tax income for the year ended December 31, 2011.  The Company’s income tax expense was $2.0 million for the nine months ended September 30, 2010.  The effective tax rate for 2010 was greater than the statutory rate due to certain non-deductible CHS acquisition related costs which were treated as a discrete item for tax purposes. 

The Company files income tax returns, including returns for its subsidiaries, with Federal, state and local jurisdictions.  The Company's uncertain tax positions are related to tax years that remain subject to examination.  As of September 30, 2011, U.S. tax returns for 2008 through 2010 remain subject to examination by Federal tax authorities.  Tax returns for the years 2007 through 2010 remain subject to examination by state and local tax authorities for a majority of the Company's state and local filings.