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Income Taxes
6 Months Ended
Jun. 30, 2011
Income Taxes [Abstract]  
INCOME TAXES
8. INCOME TAXES
The Company’s effective tax rate for continuing operations was a benefit of 7.5% and a benefit of 58.3% for the three months ended June 30, 2011 and 2010, respectively.
The Company’s effective tax rate for continuing operations was an expense of 42.9% and a benefit of 30.8% for the six months ended June 30, 2011 and 2010, respectively.
The tax rates for the three and six months ended June 30, 2011 do not reflect any tax benefit on domestic losses as a result of the domestic valuation allowance which was recorded in the fourth quarter of 2010. For the three and six months ended June 30, 2010, a tax benefit on domestic losses of $2.7 million and $4.5 million, respectively was recorded. The tax benefit for the three and six months ended June 30, 2011 is primarily associated with $0.7 million of foreign income tax, and is partially offset by the release of tax reserves related to the resolution of a foreign tax audit of $0.4 million during the first quarter. The three month period ended June 30, 2011 had a favorable impact of $0.4 million due to a reduction of the valuation allowance needed for domestic deferred tax assets.
The Company’s unrecognized tax benefits were $3.8 million at January 1, 2011, of which $4.1 million are tax benefits that, if recognized, would reduce the annual effective tax rate. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Interest and penalties amounting to $0.2 million and $0.1 million, respectively, are included in the condensed consolidated balance sheet at June 30, 2011. The Company expects the unrecognized tax benefits to decrease by $0.3 million over the next twelve months. In the six months ended June 30, 2011, the Company’s unrecognized tax benefits decreased by $0.1 million, primarily due to the aforementioned foreign tax audit resolution net of an IRS audit adjustment agreed to during the quarter.