INCOME TAXES

9 Months Ended

Sep. 30, 2011

INCOME TAXES

INCOME TAXES

5. INCOME TAXES

In connection with the change in method of accounting for certain repair costs in 2010, the Company identified approximately $36 million of unrecognized tax benefit.  Because this method change is primarily a temporary difference, this additional benefit, if recognized, would not have a significant effect on the effective tax rate.  Within the next 12 months, it is reasonably possible that this unrecognized tax benefit could increase by as much as $12 million or decrease by as much as $36 million.  The events that could cause these changes are direct settlements with taxing authorities, legal or administrative guidance by relevant taxing authorities, or the lapse of an applicable statute of limitation.  No other material changes in the status of the Company’s tax positions have occurred through September 30, 2011.

The Company recognizes interest accrued related to unrecognized tax benefits within interest expense and recognizes tax penalties within other expenses.  The Company has accrued $0.7 million and $1.5 million of such interest expense for the three and nine months ended September 30, 2011.  Amounts accrued in the prior periods were not significant.