Income Taxes

9 Months Ended

Sep. 25, 2012

Income Taxes [Abstract]

Income Taxes

Note 5 – Income Taxes

For the 39 weeks ended September 25, 2012, the Company recorded income tax expense of $3.0 million which resulted in an effective income tax rate of 17.0% compared to income tax expense of $4.8 million or an effective tax rate of 21.1% during the prior year. Fiscal 2012 included a favorable adjustment of $0.5 million related to the release of liabilities for uncertain tax positions. The lower than statutory rate for both periods was primarily attributable to various federal employment-related tax credits. Several, but not all, of these federal tax credit programs historically utilized by the Company have not been extended for 2012 and are therefore excluded from the 2012 tax rate calculation.

The Company files a consolidated US federal tax return with the parent company, NPC Holdings. The Company allocates taxes between it and the Parent utilizing the separate return method.

The liability for uncertain tax positions was $4.6 million as of September 25, 2012, was considered long term and was included in other deferred items in the Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, (in thousands):

Balance at December 27, 2011	$	9,527
Purchase accounting adjustments		(6,682	)
Additions based on tax positions related to the current year		2,439
Lapse of applicable statute of limitations		(895	)
Additional interest / penalties accrued		164
Balance at September 25, 2012	$	4,553