Income Taxes

9 Months Ended

Oct. 02, 2011

Income Taxes [Abstract]

Income Taxes

15. Income Taxes

The Company’s effective tax rate, as calculated by dividing income tax expense by income before income taxes, for YTD 2011 and YTD 2010 was 35.5% and 34.6%, respectively. The Company’s effective tax rate, as calculated by dividing income tax expense by the difference of income before income taxes minus net income attributable to the noncontrolling interest, for YTD 2011 and YTD 2010 was 37.7% and 37.0%, respectively.

The following table provides a reconciliation of the income tax expense at the statutory federal rate to actual income tax expense.

	First Nine Months
In Thousands	2011			2010
Statutory expense	$	15,053		$	17,910
State income taxes, net of federal effect		1,875			2,165
Manufacturing deduction benefit		(1,066	)		(1,791	)
Meals and entertainment		619			774
Adjustment for uncertain tax positions		(393	)		(1,080	)
Tax law change related to Medicare Part D subsidy		—			464
Other, net		139			494
Income tax expense	$	16,227		$	18,936

As of October 2, 2011, the Company had $4.4 million of uncertain tax positions, including accrued interest, of which $2.1 million would affect the Company’s effective tax rate if recognized. The Company had $4.8 million of uncertain tax positions as of January 2, 2011, including accrued interest, of which $2.5 million would affect the Company’s effective tax rate if recognized. The Company had $4.5 million of uncertain tax positions as of October 3, 2010, including accrued interest, of which $2.4 million would affect the Company’s effective tax rate if recognized. While it is expected that the amount of uncertain tax positions may change in the next 12 months, the Company does not expect any change to have a significant impact on the consolidated financial statements.

The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. As of October 2, 2011, January 2, 2011, and October 3, 2010, the Company had approximately $.4 million of accrued interest related to uncertain tax positions. Income tax expense included interest expense of approximately $.1 million in YTD 2011 and an interest credit of approximately $.5 million in YTD 2010.

The Patient Protection and Affordable Care Act enacted on March 23, 2010 and the Health Care and Education Reconciliation Act of 2010 enacted on March 30, 2010 include provisions that will reduce the tax benefits available to employers that receive Medicare Part D subsidies. As a result, during the first quarter of 2010, the Company recorded tax expense totaling $.5 million related to changes made to the tax deductibility of Medicare Part D subsidies.

In Q3 2010, the Company reduced its liability for uncertain tax positions by $1.7 million. The net effect of the adjustment was a decrease to income tax expense. The reduction of the liability for uncertain tax positions was due mainly to the lapse of the applicable statute of limitations.

In Q3 2011, the Company reduced its liability for uncertain tax positions by $.9 million. The net effect of the adjustment was a decrease to income tax expense. The reduction of the liability for uncertain tax positions was due mainly to the lapse of the applicable statute of limitations.

Various tax years from 1993 remain open to examination by taxing jurisdictions to which the Company is subject due to loss carryforwards.

The Company’s income tax assets and liabilities are subject to adjustment in future periods based on the Company’s ongoing evaluations of such assets and liabilities and new information that becomes available to the Company.