Income taxes

6 Months Ended

Jun. 30, 2012

Income taxes

Income taxes

13.Income taxes

Continuing Operations

The Company recognized a $13.4 million and $12.1 million provision for income tax on continuing operations which reflects an effective tax rate of 33.8% on pre-tax income and (85.1%) on a pre-tax loss for the six months ended June 30, 2012 and 2011, respectively.  Excluding the impact of discrete charges related to the U.S. Government resolutions, the effective tax rate on continuing operations for the first six months of 2012 and 2011 was 37.0% and 37.9%, respectively, The principal factors affecting the Company’s effective tax rate for the first six months of 2012 were the tax benefit of discrete items related to the U.S. Government resolutions, the Company’s mix of earnings among various tax jurisdictions, state taxes and current period losses in certain jurisdictions for which the Company does not currently provide a tax benefit.  The effective tax rate for the first six months of 2011 was impacted by discrete charges related to U.S. Government inquiries, for which no tax benefit was recorded, the mix of earnings among tax jurisdictions, state taxes and current period losses in certain foreign jurisdictions for which the Company does not currently provide a tax benefit.

Discontinued Operations

The Company recognized a $2.4 million benefit and $0.3 million provision for income tax on discontinued operations which reflect an effective tax rate of 44.2% on a pre-tax loss and 44.0% on a pre-tax income for the six months ended June 30, 2012 and 2011, respectively.  The effective tax rate on discontinued operations for the first six months of 2012 was 37.0% excluding the impact of the gain on the sale of Breg, Inc. in 2012.  The principal factors affecting the Company’s effective tax rate for the first six months of 2012 and 2011 were the tax benefit of discrete items, the Company’s mix of earnings among various tax jurisdictions, state taxes and current period losses in certain jurisdictions for which the Company does not currently provide a tax benefit.

As of June 30, 2012 and December 31, 2011, the Company’s gross unrecognized tax benefit was $0.6 million and $0.7 million, respectively.  The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.  The Company had approximately $0.5 million accrued for payment of interest and penalties as of June 30, 2012 and December 31, 2011.  The entire amount of unrecognized tax benefits, including interest, would favorably impact the Company’s effective tax rate if recognized.  As of June 30, 2012, the Company does not expect the amount of unrecognized tax benefits to change significantly over the next twelve months.

The Company files a consolidated income tax return in the U.S. federal jurisdiction and numerous consolidated and separate income tax returns in many state and foreign jurisdictions.  The statute of limitations with respect to federal tax authorities is closed for years prior to December 31, 2008.  The statute of limitations for the various state tax filings is closed in most instances for years prior to December 31, 2007.  The statute of limitations with respect to the major foreign tax filing jurisdictions is closed for years prior to December 31, 2006.