Income Taxes

9 Months Ended

Oct. 01, 2011

Income Taxes [Abstract]

Income Taxes

Note 9 – Income Taxes

The Company’s effective tax rate for the third quarter of 2011 was 33 percent compared with 33 percent for the same period last year.  The Company’s effective tax rate for the first nine months of 2011 was 33 percent compared with 28 percent for the same period last year.  Factors that explain the difference between the effective tax rate and what would be computed using the U.S. federal statutory tax rate for the first nine months were reductions related to: (i) the effect of foreign tax rates lower than statutory tax rates and other foreign items of $0.6 million; (ii) unrecognized tax benefits of $1.9 million; and (iii) the U.S. production activities deduction of $3.0 million.  These items were partially offset by the provision for state income taxes, net of the federal benefit, of $3.7 million.

Due to ongoing federal and state income tax audits and potential lapses of the statutes of limitations in various taxing jurisdictions, it is reasonably possible that unrecognized tax benefits may decrease in the next twelve months by up to $3.8 million.  Total unrecognized tax benefits including derecognized deferred tax assets at the end of the third quarter were $7.3 million, without consideration of any applicable federal benefit, including $0.3 million of accrued interest and penalties.  Of the $7.3 million, up to $4.5 million could impact the effective tax rate, if recognized.

The Company files a consolidated U.S. federal income tax return and numerous consolidated and separate-company income tax returns in many state, local, and foreign jurisdictions.  The statute of limitations is open for the Company’s federal tax return and most state income tax returns for 2008 and all subsequent years.  The statutes of limitations for certain state and foreign returns are open for earlier tax years due to ongoing audits and differing statute periods.  While the Company believes that it is adequately reserved for possible future audit adjustments, the final resolution of these examinations cannot be determined with certainty and could result in final settlements that differ from current estimates.