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Income Taxes
6 Months Ended
Jun. 28, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The Company’s effective tax rate on income from continuing operations for the three months ended June 28, 2015 and June 29, 2014 was 38.1% and 44.2%, respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 35% due to the effect of (1) state income taxes net of federal benefits, primarily resulting from changes to state deferred taxes, (2) changes to valuation allowances on state net operating loss carryforwards due to the expected sale of restaurants under our system optimization initiative, (3) the impact of non-deductible goodwill disposed of in connection with our system optimization initiative, (4) employment credits and (5) foreign rate differential. The changes to state deferred taxes during the three months ended June 28, 2015 was primarily due to the deferred tax impact of an internal restructuring required to complete the securitized financing facility discussed in Note 7, partially offset by the expected sale of restaurants under our system optimization initiative described in Note 3. The changes to state deferred taxes during the three months ended June 29, 2014 was primarily due to the enactment of a mandatory consolidated return filing requirement in New York.

The Company’s effective tax rate on income from continuing operations for the six months ended June 28, 2015 and June 29, 2014 was 34.4% and 41.6%, respectively. The Company’s effective tax rate varies from the U.S. federal statutory rate of 35% due to the effect of (1) state income taxes net of federal benefits, primarily resulting from changes to state deferred taxes, (2) changes to valuation allowances on state net operating loss carryforwards due to the expected sale of restaurants under our system optimization initiative, (3) adjustments related to prior year tax matters including changes to unrecognized tax benefits, (4) the impact of non-deductible goodwill disposed of in connection with our system optimization initiative, (5) foreign rate differential and (6) employment credits. The changes to state deferred taxes during the six months ended June 28, 2015 was primarily due to the deferred tax impact of an internal restructuring required to complete the securitized financing facility discussed in Note 7, partially offset by the expected sale of restaurants under our system optimization initiative described in Note 3. The changes to state deferred taxes during the six months ended June 29, 2014 was primarily due to the enactment of a mandatory consolidated return filing requirement in New York.

During the first quarter of 2015, we concluded two state income tax examinations which resulted in the recognition of a net tax benefit of $1,872 and the reduction of our unrecognized tax benefits by $3,686. Additionally, during the second quarter of 2015, unfavorable state court decisions and audit experience led us to abandon certain refund claims, which resulted in a reduction of our unrecognized tax benefits by $1,274. There were no other significant changes to unrecognized tax benefits or related interest and penalties for the Company during the six months ended June 28, 2015. During the next twelve months it is reasonably possible the Company will reduce its unrecognized tax benefits by up to $964, primarily due to the completion of state tax examinations.