Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

11. Income Taxes

The Company calculated its income tax provision for the three and six months ended June 30, 2011 in accordance with the requirements of Accounting Standards Codification Topic 740, "Income Taxes."

The Company's effective tax rate of 31.4% for the three months ended June 30, 2011, is higher than the Company's effective tax rate of 31.2% for the three months ended June 30, 2010 primarily due to a higher amount of income earned during 2011 in the U.S., where the statutory federal tax rate is 35%.

The Company's effective tax rate of 31.2% for the six months ended June 30, 2011 is higher than the Company's effective tax rate of 30.2% for the six months ended June 30, 2010. While the Company's effective tax rate for the six months ended June 30, 2011 includes benefits related to the U.S. federal research tax credit, which was not extended until the fourth quarter of 2010, and the permanent reinvestment of its non-U.S. subsidiaries' undistributed earnings as of December 31, 2010, the Company's effective tax rate for the six months ended June 30, 2010 included a tax benefit related to a change in measurement of certain tax positions.

The Company's effective tax rates for the three and six months ended June 30, 2011 are lower than the statutory U.S. federal tax rate primarily as a result of generating earnings in jurisdictions taxed at rates lower than the U.S. statutory tax rate, the U.S. federal tax benefit on domestic manufacturing activities, and the U.S. federal research credit. These items are partially offset by U.S. state taxes, net of the U.S. federal benefit and certain statutorily non-deductible expenses.

During the three and six months ended June 30, 2011, the Company's gross unrecognized tax benefits increased by $0.7 million and $2.3 million, respectively, related to tax positions taken in both the current and prior periods. During the three and six months ended June 30, 2011, the total amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate increased by approximately $0.8 million and $2.4 million, respectively.

The Company recognizes interest related to uncertain tax positions in its income tax expense. During the three and six months ended June 30, 2011, the total amount of interest expense related to unrecognized tax benefits recognized in the Company's consolidated statement of operations was $0.1 million and $0.1 million, respectively. At June 30, 2011 and December 31, 2010, the total amount of accrued interest expense related to unrecognized tax benefits recorded in the Company's consolidated balance sheet was $0.5 million and $0.4 million, respectively.

The Company regularly assesses the potential outcomes of both ongoing examinations and future examinations for the current and prior years in order to ensure the Company's provision for income taxes is adequate. The Company believes that adequate accruals have been provided for all open years.

The Company's income tax returns are subject to examination by the Internal Revenue Service ("IRS") as well as U.S. state and local and non-U.S. taxing authorities. The IRS has completed its examinations of the Company's federal income tax returns for all years through 2008. The 2007, 2008, and 2009 federal income tax returns of an acquired subsidiary remain open to examination by the IRS.

With few exceptions, the Company is no longer subject to U.S. state and local or non-U.S. income tax examinations by taxing authorities for years before 2006. As of June 30, 2011, the Company is currently under audit by various U.S. state and non-U.S. taxing authorities.

As of June 30, 2011, it is reasonably possible that the Company's unrecognized tax benefits will not significantly change during the next twelve months.