Income Taxes

3 Months Ended

Mar. 31, 2012

Income Tax Uncertainties [Abstract]

Income Taxes

10. Income Taxes

The Company determined the income tax provision for the three months ended March 31, 2012 and 2011 by estimating the effective annual tax rates for 2012 and 2011 of 39% and 26%, respectively.

The Company recorded a provision for corporate income taxes of $2,446 for the three months ended March 31, 2012 compared to a provision of $529 for the three months ended March 31, 2011. The Company's effective tax rate was 39% in the three months ended March 31, 2012 compared to 26% in the three months ended March 31, 2011. The benefits from the Company's captive insurance arrangement impacted the Company's effective tax rate on its pre-tax income in the three months ended March 31, 2012 from 44% to 39% and impacted the Company's effective tax rate on its pre-tax income for the three months ended March 31, 2011 from 43% to 26%.

As of March 31, 2012, $1,013 represents the amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate in 2012.

The Company recognizes both interest accrued related to unrecognized tax benefits and penalties in income tax expense, if deemed applicable. As of March 31, 2012, the amount accrued for interest was $263.

The Company files federal income tax returns, a foreign jurisdiction return and multiple state and local jurisdiction tax returns. The Company is no longer subject to examinations of its federal income tax returns by the Internal Revenue Service for years 2009 and prior. The following state and local jurisdictions are currently examining the Company's respective returns for the years indicated: New York State (2006, 2007, 2008, 2009), and New York City (2006, 2007, 2008). These examinations are ongoing and the Company is working with the respective taxing authorities and providing all requested information.

As of March 31, 2012, the Company has net deferred tax assets of $37,603. Quarterly, the Company assesses the weight of all positive and negative evidence to determine whether the net deferred tax asset is realizable. In 2011, the Company returned to profitability while in 2010 and 2009, the Company incurred losses. In 2012, the Company had a profitable first quarter and expects to be profitable for the full year 2012. The Company has historically been a taxpayer and projects that it will be in a three year cumulative income position, excluding non-recurring items, as of December 31, 2012. In addition, the Company, based on recent trends, projects improved performance and future income sufficient to realize the deferred tax assets during the periods when the temporary tax deductible differences reverse. The Company has federal and state net operating loss carry-forwards which the Company believes will be realized within the available carry-forward period, except for a small state net operating loss carry-forward in Rhode Island due to the short carry-forward period in that state. Accordingly, the Company concluded that it is more likely than not that the deferred tax assets will be realized. If actual results do not meet the Company's forecasts and the Company incurs losses in 2012 and beyond, a valuation allowance against the deferred tax assets may be required in the future. In addition, with the exception of the deductions related to the Company's captive insurance for state taxes, taxable income has been and is projected to be the same as federal. The state net deferred tax asset balance as of March 31, 2012 is $21,191.