Income Taxes

9 Months Ended

Oct. 01, 2011

Income Taxes

Income Taxes

3. Income Taxes

The provision for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for discrete events occurring in a particular period. The effective income tax rate was 39.4% and 38.6% for the thirteen weeks ended October 1, 2011 and October 2, 2010, respectively, and 37.7% and 37.6% for the thirty-nine weeks ended October 1, 2011 and October 2, 2010, respectively.  The increase in the effective tax rate for the thirteen-week period ended October 1, 2011 was primarily due to a permanent true up of the 2010 federal and state income tax returns as filed, compared to the estimated tax provision.

The Company recognizes income tax liabilities related to unrecognized tax benefits in accordance with FASB ASC 740, Income Taxes, guidance related to uncertain tax positions, and adjusts these liabilities when its judgment changes as the result of the evaluation of new information. The Company does not anticipate any significant changes to the unrecognized tax benefits recorded at the balance sheet date within the next twelve months. The Company did not have any uncertain tax provisions recorded in the consolidated financial statements for the thirty-nine weeks ended October 1, 2011 and October 2, 2010.