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Income Taxes
6 Months Ended
Jun. 30, 2011
Income Taxes [Abstract]  
INCOME TAXES
13. INCOME TAXES:
The Company’s effective tax rate as applied to pre-tax income (loss) was 36% and 31% for the three months ended June 30, 2011 and 2010, respectively. The Company’s increased effective tax rate during the 2011 period was due primarily to changes in federal and state valuation allowances in each period.
The Company’s effective tax rate as applied to pre-tax income (loss) was 36% and 28% for the six months ended June 30, 2011 and 2010, respectively. Under the Patient Protection and Affordable Care Act, which became law on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010, which became law on March 30, 2010, the Company and other companies that receive a subsidy under Medicare Part D to provide retiree prescription drug coverage will no longer receive a Federal income tax deduction for the expenses incurred in connection with providing the subsidized coverage to the extent of the subsidy received. Because future anticipated retiree health care liabilities and related subsidies were already reflected in the Company’s financial statements, this change required the Company to reduce the value of the related tax benefits recognized in its financial statements during the period the law was enacted. As a result, the Company recorded a one-time, non-cash tax charge of $0.8 million during the six months ended June 30, 2010 to reflect the impact of this change. This charge, as well as changes in the Company’s valuation allowances during each period, resulted in the change to the effective tax rate noted above.
As of June 30, 2011 and December 31, 2010, the Company had $16.0 million and $19.0 million of unrecognized tax benefits, respectively, of which $9.0 million would affect the Company’s effective tax rate if recognized. These liabilities are recorded in other long-term liabilities in the accompanying condensed consolidated balance sheets. The Company estimates the overall decrease in unrecognized tax benefits in the next twelve months will be approximately $14.1 million, mainly due to the expiration of various statutes of limitations. As of June 30, 2011 and December 31, 2010, the Company had accrued $2.0 million and $1.9 million, respectively, of interest and $0.1 million of penalties related to uncertain tax positions.