Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

Note 10: Income Taxes

The Company recorded an income tax provision of $9.9 million, reflecting an effective rate of 39.1% of pretax income during the three months ended September 30, 2011. The effective tax rate for the three months ended September 30, 2011 primarily consisted of a provision for federal income taxes of 32.8% (which is net of a benefit for state taxes of 2.2%), a blended provision for state taxes of 6.2% and a net provision for permanent book versus tax differences of 0.1%. The Company recorded an income tax provision of $6.6 million, reflecting an effective rate of 35.0% of pretax income during the three months ended September 30, 2010. The effective tax rate for the three months ended September 30, 2010, primarily consisted of a provision for federal income taxes of 32.8% (which is net of a benefit for state taxes of 2.2%), a blended provision for state taxes of 6.4%, a benefit for the effect of permanent book versus tax differences of 1.6%, a benefit of an Internal Revenue Service ("IRS") refund of interest of 0.5%, a benefit from a state refund of 0.3%, and a benefit for the reduction in the state effective tax rate and the applicable true-up of the state and federal tax accounts of 1.8%.

The Company recorded an income tax provision of $28.0 million, reflecting an effective rate of 38.9% of pretax income during the nine months ended September 30, 2011. The effective tax rate for the nine months ended September 30, 2011, primarily consisted of a provision for federal income taxes of 32.8% (which is net of a benefit for state taxes of 2.2%), a blended provision for state taxes of 6.2% and a benefit for permanent book versus tax differences of 0.1%. The Company recorded an income tax provision of $19.9 million, reflecting an effective rate of 36.3% of pretax income during the nine months ended September 30, 2010. The effective tax rate for the nine months ended September 30, 2010, primarily consisted of a provision for federal income taxes of 32.8% (which is net of a benefit for state taxes of 2.2%), a blended provision for state taxes of 6.4%, a benefit for the effect of permanent book versus tax differences of 1.8%, a benefit of an IRS tax refund including interest of 0.7%, a benefit from a state tax refund of 0.1%, and a benefit for the reduction in the state effective tax rate and the applicable true-up of the state and federal tax accounts of 0.3% .

The increase in the overall effective tax rates from three and nine months ended September 30, 2010 to September 30, 2011 was primarily attributable to an increase in the effective tax rate in India. The Company's operations in India benefited from a tax holiday, which expired on March 31, 2011. Accounting guidance requires the impact of the expiration of the tax holiday to be spread throughout the year ended December 31, 2011. Accordingly, the impact of the expiration was reflected in the effective tax rates for three and nine months ended September 30, 2011.

As of September 30, 2011, the Company had a gross unrecognized tax benefit of $3.7 million that, if recognized, would result in a net tax benefit of approximately $2.4 million and would have a positive effect on the Company's effective tax rate.

For the three and nine months ended September 30, 2011, the Company has not provided for the United States income taxes or foreign withholding taxes on the quarterly undistributed earnings from continuing operations of its subsidiary operating outside of the United States. Undistributed earnings of the subsidiary for the three and nine months ended September 30, 2011, were approximately $0.7 million and $3.9 million, respectively. Such undistributed earnings are considered permanently reinvested.