Income Taxes

12 Months Ended

Dec. 30, 2012

Income Taxes [Abstract]

Income Taxes

14.    Income Taxes

The current income tax provision represents the estimated amount of income taxes paid or payable for the year, as well as changes in estimates from prior years. The deferred income tax provision represents the change in deferred tax liabilities and assets. The following table presents the significant components of the provision for income taxes for 2012, 2011 and 2010.

	Fiscal Year
In Thousands	2012		2011		2010
Current:
Federal	$	12,871	$	9,295	$	25,988
State		1,880		2,345		567
Total current provision	$	14,751	$	11,640	$	26,555
Deferred:
Federal	$	5,667	$	6,636	$	(6,695	)
State		1,471		1,252		1,789
Total deferred provision (benefit)	$	7,138	$	7,888	$	(4,906	)
Income tax expense	$	21,889	$	19,528	$	21,649

The Company’s effective income tax rate, as calculated by dividing income tax expense by income before income taxes, for 2012, 2011 and 2010 was 41.0%, 37.9% and 35.4%, respectively. The Company’s effective tax rate, as calculated by dividing income tax expense by income before income taxes minus net income attributable to noncontrolling interest, for 2012, 2011 and 2010 was 44.6%, 40.6% and 37.5%, respectively. The following table provides a reconciliation of income tax expense at the statutory federal rate to actual income tax expense.

	Fiscal Year
In Thousands	2012			2011			2010
Statutory expense	$	18,672		$	18,163		$	21,429
State income taxes, net of federal benefit		2,191			2,260			2,669
Noncontrolling interest – Piedmont		(1,694	)		(1,479	)		(1,385	)
Adjustments for uncertain tax positions		761			(221	)		(985	)
Valuation allowance change		1,767			445			(56	)
Manufacturing deduction benefit		(1,330	)		(1,190	)		(1,995	)
Meals and entertainment		1,184			1,113			1,008
Other, net		338			437			964
Income tax expense	$	21,889		$	19,528		$	21,649

As of December 30, 2012, the Company had $5.5 million of uncertain tax positions, including accrued interest, of which $3.0 million would affect the Company’s effective tax rate if recognized. As of January 1, 2012, the Company had $4.7 million of uncertain tax positions, including accrued interest, of which $2.3 million would affect the Company’s effective 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 such change would have a significant impact on the consolidated financial statements.

A reconciliation of the beginning and ending balances of the total amounts of uncertain tax positions (excludes accrued interest) is as follows:

	Fiscal Year
In Thousands	2012			2011			2010
Gross uncertain tax positions at the beginning of the year	$	4,281		$	4,386		$	4,649
Increase as a result of tax positions taken during a prior period		315			28			0
Increase as a result of tax positions taken in the current period		538			641			769
Reduction as a result of the expiration of the applicable statute of limitations		(184	)		(774	)		(1,032	)
Gross uncertain tax positions at the end of the year	$	4,950		$	4,281		$	4,386

The Company records liabilities for uncertain tax positions related to certain income tax positions. These liabilities reflect the Company’s best estimate of the ultimate income tax liability based on currently known facts and information. Material changes in facts or information as well as the expiration of statute and/or settlements with individual tax jurisdictions may result in material adjustments to these estimates in the future.

The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. As of December 30, 2012 and January 1, 2012, the Company had $.5 million and $.4 million, respectively, of accrued interest related to uncertain tax positions. Income tax expense included interest expense of $.1 million in 2012, interest credit of $15,000 in 2011 and interest credit of $.5 million in 2010 primarily due to adjustments in the liability for uncertain tax positions.

In the third quarter of 2012, 2011 and 2010, the Company reduced its liability for uncertain tax positions by $.2 million, $.9 million and $1.7 million, respectively. The net effect of the adjustments was a decrease to income tax expense in 2012, 2011 and 2010 by $.2 million, $.9 million and $1.7 million, respectively. The reduction of the liability for uncertain tax positions during these years was mainly due to the expiration of the applicable statute of limitations.

The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 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.

The American Taxpayer Relief Act (“Act”) was signed into law on January 2, 2013. The Act approved a retroactive extension of certain favorable business and energy tax provisions that had expired at the end of 2011 that are applicable to the Company. The financial impact of these retroactive extensions will be reflected in the Company’s first quarter 2013 income taxes. The Company does not expect the provisions to have a material impact on the Company’s consolidated financial statements.

Tax years from 2009 remain open to examination by the Internal Revenue Service, and various tax years from 1994 remain open to examination by certain state tax 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.

Deferred income taxes are recorded based upon temporary differences between the financial statement and tax bases of assets and liabilities and available net operating loss and tax credit carryforwards. Temporary differences and carryforwards that comprised deferred income tax assets and liabilities were as follows:

In Thousands	Dec. 30, 2012			Jan. 1, 2012
Intangible assets	$	124,661		$	123,995
Depreciation		72,953			76,758
Investment in Piedmont		41,985			41,504
Debt exchange premium		1,585			2,099
Inventory		10,750			9,511
Deferred income tax liabilities		251,934			253,867
Net operating loss carryforwards		(5,718	)		(5,527	)
Deferred compensation		(39,518	)		(38,398	)
Postretirement benefits		(27,601	)		(25,666	)
Capital lease agreements		(6,042	)		(5,567	)
Pension (nonunion)		(29,116	)		(29,412	)
Pension (union)		(3,395	)		(3,550	)
Other		(7,520	)		(8,006	)
Deferred income tax assets		(118,910	)		(116,126	)
Valuation allowance for deferred tax assets		3,231			1,464
Total deferred income tax liability		136,255			139,205
Net current income tax asset		(4,710	)		(4,886	)
Net noncurrent deferred income tax liability	$	140,965		$	144,091

Note: Net current income tax asset from the table is included in prepaid expenses and other current assets on the consolidated balance sheets.

Valuation allowances are recognized on deferred tax assets if the Company believes that it is more likely than not that some or all of the deferred tax assets will not be realized. The Company believes the majority of the deferred tax assets will be realized due to the reversal of certain significant temporary differences and anticipated future taxable income from operations.

The valuation allowance of $3.2 million as of December 30, 2012 and $1.5 million as of January 1, 2012, respectively, was established primarily for certain net operating loss carryforwards which expire in varying amounts through 2031.