INCOME TAXES

9 Months Ended

Sep. 30, 2011

Notes To Financial Statements [Abstract]

Income Taxes

NOTE 3: INCOME TAXES

 For the three and nine months ended September 30, 2011, the Company’s effective tax rate was (16.9)% and (15.1)%, respectively. For the three and nine months ended September 30, 2010, the Company’s effective tax rate was 60.6% and 11.1%, respectively.  For the three and nine months ended September 30, 2011 and 2010, the Company’s effective income tax rate was determined based on the estimated annual effective income tax rate.

The effective tax rate for the three and nine months ended September 30, 2011 was lower than what would have been expected if the federal statutory rate were applied to income before taxes. Items reducing the effective income tax rate included the change in the valuation allowances associated with certain deferred tax assets, and the change in reserves related to uncertain income tax positions. The effective tax rate for the three and nine months ended September 30, 2010 was higher than what would have been expected if the federal statutory rate were applied to income before taxes due to a change in management’s estimates for 2010 annual operating results, which includes the mix of income between tax jurisdictions, the change in the valuation allowances associated with certain deferred tax assets, and the change in reserves related to uncertain income tax positions.

Our 2005-2009 tax years remain subject to examination by the Internal Revenue Service (“IRS”) for U.S. federal tax purposes.  On May 26, 2011 the IRS issued a Revenue Agent’s report (“RAR”) detailing proposed adjustments for the tax years under examination. The net tax deficiency associated with the RAR is $8.5 million plus penalties of $1.5 million. On July 8, 2011, we filed a protest letter challenging the proposed adjustments contained in the RAR and are pursuing resolution of these items with the Appeals Division of the IRS. There are other ongoing audits in various international jurisdictions that are not expected to have a material effect on our financial statements.