INCOME TAXES

The following is a reconciliation of the beginning and ending amounts of gross unrecognized tax benefits for uncertain tax positions, including positions which impact only the timing of tax benefits:



	Nine Months Ended
	August 27, 2016			August 29, 2015
Unrecognized tax benefits at beginning of year	$	3,859		$	2,487
Additions for current period tax positions	757			395
Additions related to acquired tax positions	—			1,052
Reductions for prior period tax positions	—			(22		)
Reductions for lapse of statue of limitations / settlements	(28		)	(33		)
Changes in interest and penalties	109			68
Unrecognized tax benefits at end of period	$	4,697		$	3,947

At August 27, 2016, the amount of unrecognized tax benefit that would impact the effective tax rate, if recognized, was $3,369. The Company recognizes interest and penalties related to unrecognized benefits in income tax expense. At August 27, 2016, the Company had $352 accrued for the payment of interest and penalties.

The Company believes it is reasonably possible that the total amount of unrecognized tax benefits will decrease by $282 over the next twelve months as a result of expected settlements with taxing authorities or the lapse of the statute of limitations in certain jurisdictions. Due to the various jurisdictions in which the Company files tax returns and the uncertainty regarding the timing of settlements, it is possible that there could be other significant changes in the amount of unrecognized tax benefits in the next twelve months; however, the amount cannot be estimated.

The Company is regularly audited by federal, state and foreign tax authorities. The Company's federal tax returns for years subsequent to fiscal year 2012 are open for examination. With few exceptions, the Company is no longer subject to income tax examinations by state or foreign tax jurisdictions for years prior to 2010.

In June of 2016, management reversed the Company's permanent reinvestment assertion with respect to the amount of foreign earnings that have already been subject to U.S. tax under the Subpart F rules of the Internal Revenue Code. This reconsideration was based on a number of factors, including the receipt of foreign withholding tax exemptions based on a legal entity restructuring that the Company had undertaken in the prior year, the potential impact that proposed debt-equity tax regulations in the U.S. may have on the ability to repatriate earnings in the future, and consideration of the uncertainty with respect to the volatility of foreign currencies, particularly with the vote in favor of leaving the European Union in the United Kingdom referendum held on June 23, 2016. Based on this analysis, the Company repatriated approximately $23,000 of previously taxed foreign earnings during the quarter and has approximately $3,200 of previously taxed earnings remaining in foreign jurisdictions which may be repatriated in the future. The change in assertion for these foreign earnings resulted in a tax benefit of approximately $1,176 that was recorded during the quarter based on the cumulative foreign exchange movement for these earnings in prior periods. All current and future tax impacts of foreign exchange adjustments to these earnings will be recorded as a cumulative translation adjustment on an ongoing basis. The Company intends to continue to reinvest its remaining foreign earnings in overseas operations for an indefinite duration and may utilize such earnings for continued growth and expansion in existing or new markets.

The Company’s effective tax rate decreased 5.5 percentage points to 27.9% in the third quarter of 2016 from 33.4% in the third quarter of 2015. This decrease was primarily the result of a 2.4% favorable impact in the third quarter of 2016 from the change in assertion on foreign earnings discussed above as well as a 1.2% favorable impact from the benefits of the renewed research and development tax credit. The effective tax rate in the third quarter of 2015 also increased approximately 0.9% due to the federal and state tax impacts of gain recorded on the sale of J.L. Clark, which did not recur in 2016.

The effective tax rate for the first nine months of 2016 decreased 1.4% to 30.7% from 32.1% in the first nine months of 2015. This decrease was primarily driven by the change in assertion on foreign earnings in the current quarter as well as the favorable impact of the renewed research and development tax credit during the current year. The increase in the effective tax rate during 2015 related to the gain on the sale of J.L. Clark, which did not recur during 2016 and was offset by the tax impact of the Transweb/3M litigation satisfaction of judgment (see Note 12) recorded in domestic earnings during 2016.