Income Taxes

9 Months Ended

Jul. 03, 2011

Income Taxes

Income Taxes

12. Income Taxes

The effective tax rate for the three months ended July 3, 2011 and July 4, 2010 was 30% and 13%, respectively.

The Company's effective tax rate for the nine months ended July 3, 2011 and July 4, 2010 was 33% and 27%, respectively. The Company's current period tax rate was favorably impacted by discrete period return to accrual adjustments and expiration of tax statutes in the current period totaling approximately $1.5 million. The prior year's rate was also impacted by the expiration of tax statutes and reductions of international tax liabilities also totaling approximately $1.5 million. However, due to the significant increase in profit before tax this year, the impact of these benefits in reducing the Company's tax rate was less significant in the current period. The Company estimates that its fiscal 2011 effective tax rate will be approximately 35%.

As of July 3, 2011 and October 3, 2010, the Company had approximately $2.9 million and $3.8 million, respectively, of uncertain tax positions, of which $1.8 million and $2.2 million, respectively, if recognized, could impact the effective tax rate. No further reversals of uncertain tax positions are expected during fiscal 2011. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense in the consolidated statements of income. The Company had $152,000 of accrued interest and penalties in income taxes payable as of July 3, 2011 and $312,000 as of October 3, 2010.

The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. The Company has concluded all U.S. federal and most state and foreign income tax matters through fiscal 2007. The Internal Revenue Service recently concluded an audit of our fiscal 2007 return with no material adjustments. The acquired losses from the business acquired from Revivant Corporation in fiscal 2005 for tax years 1997 through 2004 remain open to examination by the IRS to the extent losses are claimed in open years.