Accounting for Uncertainty in Income Taxes

9 Months Ended

Sep. 30, 2012

Accounting for Uncertainty in Income Taxes

Note 12.               Accounting for Uncertainty in Income Taxes

In accordance with FASB ASC 740, Income Taxes (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

As of September 30, 2012 and December 31, 2011, the Company had $23.7 and $19.2, respectively, of net unrecognized tax benefits. Any subsequent recognition of unrecognized tax benefits, if recognized, would lower the effective tax rate.

The Company classifies interest and penalties related to income tax as income tax expense. The amount included in the Company’s liability for unrecognized tax benefits for interest and penalties was less than $1.0 as of September 30, 2012 and December 31, 2011.

The Company recently completed its U.S. federal income tax examination for year 2006 with immaterial adjustments, and with minor exceptions, the Company is currently open to audit by the tax authorities for the five tax years ending December 31, 2011. There are currently no material income tax audits in progress.

We expect an effective tax rate of approximately 30% for 2012 as compared with our previous effective rate of approximately 32%. Our tax rate during the current three month period of 9.3% reflects the revision in expected rates during the current period arising from somewhat higher R&D tax credits realized than previously estimated, a favorable mix of revenues and other one-time tax benefits.