Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

NOTE 13. INCOME TAXES

In the three months ended September 30, 2011, the Company's effective income tax rate was 9% as compared to 14% in the corresponding period in 2010, primarily due to geographic mix of pretax income. In the nine months ended September 30, 2011, the Company's effective income tax rate was 12% as compared to 43% in the corresponding period in 2010, primarily due to geographic mix of pretax income, the closure of the 2008 and 2009 U.S. Internal Revenue Service (IRS) examination which resulted in a net tax benefit of $2.3 million in the second quarter of 2011, as compared to $27.5 million net charge in the second quarter of 2010 resulting from the IRS audit settlement of the Company's 2005 through 2007 tax years.

The 2011 and 2010 third quarter effective tax rates are lower than the statutory federal income tax rate of 35% primarily due to the geographical mix of pre-tax income.

The Company and its U.S. subsidiaries are subject to U.S. federal and state income tax. The Company has concluded all U.S. federal income tax matters for the years through 2009 and state income tax matters for years through 1992. Generally, non-U.S. income tax matters have been concluded for years through 2000. The Company is currently in various stages of multiple year examinations by State and foreign taxing authorities. It is possible that the total amount of unrecognized tax benefits could change in the next twelve months. Such changes could occur based on the normal expiration of various statutes of limitations or the possible conclusion of ongoing tax audits in various jurisdictions around the world.

The amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future period was $28.1 million as of September 30, 2011 flat with the balance as of December 31, 2010. The year over year change is flat as the realization was wholly offset by other reserves. Unrecognized tax benefits are recorded in Other non-current liabilities and in the deferred tax accounts in the accompanying Condensed Consolidated Balance Sheets.

The Company's continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company's unrecognized tax benefit liabilities include interest and penalties at September 30, 2011 and December 31, 2010, of $2.9 million and $2.6 million, respectively, which were recorded in Other non-current liabilities in the accompanying Condensed Consolidated Balance Sheets.