Income taxes

The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was approximately $32.8 million as of June 30, 2013 and $63.2 million as of December 30, 2012. The following table summarizes the activity related to unrecognized tax benefits, excluding the federal tax benefit of state tax deductions:



In thousands of dollars	Unrecognized Tax Benefits

Balance at Dec. 30, 2012	$	86,180
Changes in unrecognized tax benefits:
Additions based on tax positions related to the current year	3,781
Additions for tax positions of prior years	2,761
Reductions for tax positions of prior years	(25,348		)
Settlements	(277		)
Reductions due to lapse of statutes of limitations	(21,178		)
Balance at Jun. 30, 2013	$	45,919

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. Interest income attributable to overpayment of income tax and interest credits for the reversal of interest expense previously recorded for uncertain tax positions which are subsequently released are also recognized as a component of income tax expense. The Company recognized a net benefit from the reversal of interest and penalty expense of $4.6 million and $2.0 million during the second quarter of 2013 and 2012, respectively. The Company recognized a net benefit from the reversal of interest and penalty expense of $17.4 million and $4.1 million during the first six months of 2013 and 2012, respectively. The net interest and penalty benefits recognized in the second quarter and first six months of 2013 are primarily from the release of uncertain tax positions and the lapse of statues of limitations. The amount of net accrued interest and penalties related to uncertain tax benefits as of June 30, 2013, was approximately $11.9 million and as of December 30, 2012, was approximately $29.1 million.

The Company files income tax returns in the U.S. and various state and foreign jurisdictions. The 2009 through 2012 tax years remain subject to examination by the IRS. The 2005 through 2012 tax years generally remain subject to examination by state authorities, and the years 2010 through 2012 are subject to examination in the U.K. In addition, tax years prior to 2005 remain subject to examination by certain states primarily due to the filing of amended tax returns upon settlement of the IRS examination for those years and ongoing audits.

It is reasonably possible that the amount of unrecognized benefits with respect to certain of the Company’s unrecognized tax positions will significantly increase or decrease within the next 12 months. These changes may be the result of settlement of ongoing audits, lapses of statutes of limitations or other regulatory developments. At this time, the Company estimates that the amount of its gross unrecognized tax positions may decrease by up to $9.7 million within the next 12 months.