Income Taxes

9 Months Ended

Oct. 06, 2012

Income Tax Disclosure [Text Block]

Note 10 – Income Taxes

For the third quarter of 2012 and 2011, our income tax expense was $8.4 million and $6.6 million, respectively.  For year-to-date 2012, our income tax benefit was $16.4 million as compared to income tax expense of $18.1 million for year-to-date 2011.

The provision for income taxes reflects the Company’s estimate of the effective rate expected to be applicable for the full fiscal year, adjusted for any discrete events, which are reported in the period that they occur.  This estimate is re-evaluated each quarter based on the Company’s estimated tax expense for the full fiscal year.  During the third quarter 2012, the Company filed reports with various taxing authorities which resulted in the refunds of tax payments.   Additionally, the third quarter 2012 and 2011 Company effective tax rate was impacted by the reversal of previously unrecognized tax benefits primarily due to statute of limitations expirations.  The effect of these discrete events in the third quarter 2012 and 2011 were each less than ($0.1) million.  The effective tax rate for fiscal 2012 was also impacted by a $14.4 million second quarter discrete event related to the goodwill impairment and the related non-deductible portion thereof.  For the third quarter of 2012, our effective tax rate was 36.4% as compared to 39.7% for the third quarter of 2011.  For year-to-date 2012, our effective tax rate was 20.1% as compared to 39.6% for year-to-date 2011.

The total amount of unrecognized tax benefits as of the end of the third quarter of 2012 was $2.2 million.  There was no net change in unrecognized tax benefits since June 16, 2012.  The total amount of tax benefits that if recognized would impact the effective tax rate was $0.4 million at the end of the third quarter of 2012.  We recognize interest and penalties accrued related to unrecognized tax benefits in income tax expense.  At the end of the third quarter of 2012, we had approximately $0.1 million for the payment of interest and penalties accrued.

We do not expect our unrecognized tax benefits to change significantly over the next 12 months. 

The Company or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and local jurisdictions.  With few exceptions, we are no longer subject to U.S. federal, state or local examinations by tax authorities for years 2008 and prior.