NOTE 10.  INCOME TAXES

The Company recognized $23.5 million of income tax expense (or 32.6% of pretax income) during the three months ended September 30, 2011 compared to $15.8 million (or 37.2% of pretax income) for the same period in 2010.  For the three months ended September 30, 2011, income tax expense includes $2.6 million, or 3.0%, of pretax income related to non-recurring tax credits and incentives.

The Company recognized $53.9 million of income tax expense (or 36.3% of pretax income) during the nine months ended September 30, 2011 compared to $45.4 million (or 36.9% of pretax income) for the same period in 2010.  For the nine months ended September 30, 2011, income tax expense includes $2.3 million, or 1.5% of pretax income, related to non deductible costs incurred related to the IPO.  Also, the nine months ended September 30, 2011 was offset by $2.6 million, or 1.8%, related to non-recurring tax credits and incentives.

The Company files a consolidated U.S. federal tax return and various consolidated and separate tax returns as prescribed by the tax laws of the state, local, and international jurisdictions in which it and its subsidiaries operate.  The Company has been audited by the Internal Revenue Service (the “IRS”) through its March 15, 2007 tax year.  The Company has various state, local and international jurisdiction tax years open to examination (the earliest open period is 2003), and is also currently under audit in certain state and local jurisdictions.  As of September 30, 2011, the Company believes that it has appropriately reserved for any potential federal, state, local and international income tax exposures.

The Company recorded additional unrecognized tax benefits of approximately $1.6 million and $0.9 million during the nine months ended September 30, 2011 and 2010, respectively.  The additional unrecognized tax benefits recorded during the nine months ended September 30, 2011 are principally related to the continuation of previously taken tax positions.  As of September 30, 2011 and December 31, 2010, the Company had $10.3 million and $8.7 million, respectively, of unrecognized tax benefits.  As of September 30, 2011, the Company is not aware of any tax positions for which it is reasonably possible that the amounts of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $10.3 million.  The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The Company had accrued approximately $3.5 million and $2.7 million, respectively, for September 30, 2011 and December 31, 2010 in potential interest and penalties associated with uncertain tax positions.  To the extent interest and penalties are not assessed with respect to the ultimate settlement of uncertain tax positions, amounts previously accrued will be reduced and reflected as a reduction of the overall income tax provision.