Income Taxes

6 Months Ended

Jul. 03, 2011

Income Taxes [Abstract]

Income Taxes

15. Income Taxes

The Company’s effective tax rate, as calculated by dividing income tax expense by income before income taxes, for YTD 2011 and YTD 2010 was 38.1% and 37.9%, respectively. The Company’s effective tax rate, as calculated by dividing income tax expense by the difference of income before income taxes minus net income attributable to the noncontrolling interest, for YTD 2011 and YTD 2010 was 40.0% and 40.4%, respectively.

The following table provides a reconciliation of the income tax expense at the statutory federal rate to actual income tax expense.

	First Half
In Thousands	2011			2010
Statutory expense	$	9,922		$	9,810
State income taxes, net of federal effect		1,236			1,186
Manufacturing deduction benefit		(867	)		(1,200	)
Meals and entertainment		442			435
Adjustment for uncertain tax positions		363			365
Tax law change related to Medicare Part D subsidy		—			464
Other, net		239			266
Income tax expense	$	11,335		$	11,326

As of July 3, 2011, the Company had $5.2 million of uncertain tax positions, including accrued interest, of which $2.8 million would affect the Company’s effective tax rate if recognized. The Company had $4.8 million of uncertain tax positions as of January 2, 2011, including accrued interest, of which $2.5 million would affect the Company’s effective tax rate if recognized. The Company had $5.9 million of uncertain tax positions as of July 4, 2010, including accrued interest, of which $3.8 million would affect the Company’s effective tax rate if recognized. While it is expected that the amount of uncertain tax positions may change in the next 12 months, the Company does not expect any change to have a significant impact on the consolidated financial statements.

The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. As of July 3, 2011, the Company had approximately $.5 million of accrued interest related to uncertain tax positions. As of January 2, 2011, the Company had approximately $.4 million of accrued interest related to uncertain tax positions. As of July 4, 2010, the Company had approximately $1.0 million of accrued interest related to uncertain tax positions. Income tax expense included interest expense of approximately $.1 million in both YTD 2011 and YTD 2010.

The Patient Protection and Affordable Care Act enacted on March 23, 2010 and the Health Care and Education Reconciliation Act of 2010 enacted on March 30, 2010 include provisions that will reduce the tax benefits available to employers that receive Medicare Part D subsidies. As a result, during the first quarter of 2010, the Company recorded tax expense totaling $.5 million related to changes made to the tax deductibility of Medicare Part D subsidies.

Various tax years from 1992 remain open to examination by taxing jurisdictions to which the Company is subject due to loss carryforwards.

The Company’s income tax assets and liabilities are subject to adjustment in future periods based on the Company’s ongoing evaluations of such assets and liabilities and new information that becomes available to the Company.