INCOME TAXES

6 Months Ended

Jun. 30, 2012

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 3: INCOME TAXES

For the three and six months ended June 30, 2012, the Company's effective tax rate was (12.1)% and (13.1)%, respectively. For the three and six months ended June 30, 2011, the Company's effective income tax rate was (27.9%) and (14.4%), respectively.  For the three and six months ended June 30, 2012 and 2011, the Company's effective tax rate was determined based on the estimated annual effective tax rate.

The effective tax rates for the three and six months ended June 30, 2012 and 2011 were lower than 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.

Our 2005-2009 tax years remain subject to examination by the Internal Revenue Service ("IRS") for United States 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.  On July 26, 2012, the Company participated in a hearing with the Appeals Division of the IRS, and the Company believes the net tax deficiency should approximate amounts previously recorded as uncertain income tax positions.  There are other ongoing audits in various international jurisdictions that are not expected to have a material effect on our financial statements.