Income Taxes

12 Months Ended

Dec. 25, 2011

Income Taxes [Abstract]

Income Taxes

NOTE 5. INCOME TAXES  

Income tax provision (benefit) related to continuing operations consist of (in thousands):

	Year Ended
	December  25, 2011			December  26, 2010			December  27, 2009
Current:
Federal	$	28,913		$	26,625		$	29,505
State		(1,553	)		4,999			(4,774	)
Deferred:
Federal		(3,316	)		(16,672	)		2,333
State		(15,648	)		(9,351	)		(264	)
Income tax provision	$	8,396		$	5,601		$	26,800

The effective tax rate for continuing operations and the statutory federal income tax rate are reconciled as follows:

	Year Ended
	December  25, 2011			December  26, 2010			December  27, 2009
Statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		0.3	%		0.5	%		7.7	%
Changes in estimates		0.6	%		2.9	%		3.7	%
Changes in unrecognized tax benefits		(13.6	)%		(7.6	)%		(11.2	)%
Benefit of certain manufacturing deductions		—			—			(3.7	)%
Settlements		(10.4	)%		(19.5	)%		—
Other		1.5	%		3.2	%		0.6	%
Effective tax rate		13.4	%		14.5	%		32.1	%

The components of deferred tax assets and liabilities recorded in the Company's Consolidated Balance Sheet on December 25, 2011, and December 26, 2010, are (in thousands):

	2011			2010
Deferred tax assets:
Compensation benefits	$	228,367		$	267,584
State taxes		17,500			26,761
State loss carryovers		10,759			14,714
Other		6,065			7,612
Total deferred tax assets		262,691			316,671
Valuation allowance		(9,514	)		(14,714	)
Net deferred tax assets		253,177			301,957
Deferred tax liabilities:
Depreciation and amortization		258,957			384,376
Investments in unconsolidated subsidiaries		65,604			72,459
Debt discount		18,114			18,696
Deferred gain on debt		33,193			33,822
Total deferred tax liabilities		375,868			509,353
Net deferred tax liabilities	$	122,691		$	207,396

The valuation allowance relates to state net operating loss and capital carryovers. It decreased by $5.2 million during 2011and decreased by $0.2 million during 2010.

The Company has varying amounts of net operating loss and capital loss carryovers in several states. The net operating losses expire in various years between 2020 and 2031 if not used. The capital loss carryovers will expire in 2012 if not used prior to that time. The Company has approximately $0.4 million of state tax credit carryovers which do not expire.

As of December 25, 2011, the Company had approximately $50.9 million of long-term liabilities relating to uncertain tax positions consisting of approximately $30.5 million in gross unrecognized tax benefits (primarily state tax positions before the offsetting effect of federal income tax) and $20.4 million in gross accrued interest and penalties. If recognized, substantially all of the net unrecognized tax benefits would impact the effective tax rate. It is reasonably possible that a reduction of up to $37.9 million of unrecognized tax benefits and related interest may occur within the next 12 months as a result of the closure of certain audits and the expiration of statutes of limitations. Net accrued interest and penalties at December 25, 2011, December 26, 2010, and December 27, 2009, were approximately $15.5 million, $21.0 million and $17.0 million, respectively.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2011			2010			2009
Balance at beginning of fiscal year	$	51,992		$	53,359		$	74,414
Increases based on tax positions in prior year		1,409			7,529			2,432
Decreases based on tax positions in prior year		(13,475	)		(1,148	)		(1,576	)
Increases based on tax positions in current year		2,213			1,811			1,512
Settlements		—			(784	)		(16,000	)
Lapse of statute of limitations		(11,676	)		(8,775	)		(7,423	)
Balance at end of fiscal year	$	30,463		$	51,992		$	53,359

The Company is currently under audit by the following jurisdictions and for the years indicated: Oregon for 2006 through 2008, Florida for 2007 through 2010, Washington, D.C., for 2006, New Jersey for 1997 through 2006 and Illinois for 2006 and 2008 through 2009. Statutes remain open for federal purposes from 2008 through 2011 and for state purposes from 2006 through 2011, with the exception of New Jersey for which statutes remain open from 1997 through 2006.