5. INCOME TAXES

The Company’s income tax expense and related effective rate were as follows (in thousands, except percentage data):

	For the 13 Weeks Ended			For the 13 Weeks Ended			For the 27 Weeks Ended			For the 26 Weeks Ended
	July 5, 2014			June 29, 2013			July 5, 2014			June 29, 2013
Income tax expense	$	24,875		$	33,829		$	56,355		$	62,723
Income tax rate	31.2		%	32.5		%	31.2		%	30.3		%

The lower effective tax rate in the Second Quarter, as compared to the Prior Year Quarter, was primarily attributable to a change in the Company’s geographical earnings mix. The higher effective tax rate for the Year To Date Period, as compared to the Prior Year YTD period, was due to the recognition of income tax benefits in the Prior Year YTD Period from the settlement of income tax audits.

As of July 5, 2014, the total amount of unrecognized tax benefits, excluding interest and penalties, was $16.7 million, of which $11.2 million would favorably impact the effective tax rate in future periods, if recognized. During the first quarter of fiscal 2014, the U.S. Internal Revenue Service began its examination of the Company’s 2010-2012 federal income tax returns. The Company is subject to examinations in various state and foreign jurisdictions for its 2007-2013 tax years, none of which the Company believes are significant individually or in the aggregate. Audit outcomes and timing of audit settlements are subject to significant uncertainty.

The Company has classified uncertain tax positions as long-term income taxes payable, unless such amounts are expected to be paid within twelve months of the condensed consolidated balance sheet date. As of July 5, 2014, the Company had recorded $0.9 million of unrecognized tax benefits, excluding interest and penalties, for positions that could be settled within the next twelve months. Consistent with its past practice, the Company recognizes interest and/or penalties related to income tax overpayments and income tax underpayments in income tax expense and income taxes receivable/payable, respectively. The total amount of accrued income tax-related interest and penalties included in the condensed consolidated balance sheets at July 5, 2014 was $1.6 million and $0.4 million, respectively. For the Second Quarter and Year To Date Period, the Company accrued income tax-related interest expense of $0.2 million and $0.4 million, respectively.