9. INCOME TAXES

The determination of the annual effective tax is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which we operate and the ongoing development of tax planning strategies during the year. In addition, our provision for income taxes can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews, as well as other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

The following is a summary of our income tax provision and effective tax rate for continuing operations:


	For the Quarters Ended September 30,						For the Years to Date Ended September 30,
	2011			2010			2011			2010
	(Dollars in thousands)
Pretax income	$	15,983		$	40,431		$	214,417		$	225,818
Provision for income taxes	$	4,708		$	12,567		$	73,797		$	74,538
Effective tax rate		29.5	%		31.1	%		34.4	%		33.0	%

The decrease in our effective tax rate for the quarter ended September 30, 2011 as compared to the prior year quarter was primarily due to a correction of an error from the prior quarter relating to the tax treatment of certain intangible assets; and earnings mix changes, including a change in the geographical composition of our taxable income, since a higher percentage of our income from continuing operations resulted from certain operations in Europe which operate on a not-for-profit basis.

The increase in our effective tax rate for the year to date ended September 30, 2011 as compared to the prior year to date was primarily due to the prior year including a $4.2 million tax benefit resulting from credits associated with curriculum development that reduced our effective tax rate by 1.9% for the year to date ended September 30, 2010. The current year to date effective tax rate includes $1.6 million in favorable tax adjustments related to the correction of an error in previously filed U.S. income tax returns associated with the treatment of foreign interest income which reduced our effective tax rate by 0.7% for the year to date ended September 30, 2011.

We estimate that it is reasonably possible that the liability for unrecognized tax benefits for a variety of uncertain tax positions will decrease by up to $5.3 million in the next twelve months as a result of the completion of various tax audits currently in process and the expiration of the statute of limitations in several jurisdictions. Based upon a change in circumstances for one of our uncertain tax positions, $10.1 million of our gross unrecognized tax benefits was reclassified to other non-current liabilities on our September 30, 2011 unaudited consolidated balance sheet. The income tax rate for the quarter and year to date ended September 30, 2011 does not take into account the possible reduction of the liability for unrecognized tax benefits. The impact of a reduction to the liability will be treated as a discrete item in the period the reduction occurs. We recognize interest and penalties related to unrecognized tax benefits in tax expense. As of September 30, 2011, we had accrued $4.3 million as an estimate for reasonably possible interest and accrued penalties.

Our tax returns are routinely examined by federal, state and foreign tax authorities and these audits are at various stages of completion at any given time. The Internal Revenue Service completed its examination of our U.S. income tax returns through our tax year ended December 31, 2007.