The effective tax rates were 34.2% and 33.8% for the three and six months ended June 24, 2012, representing increases of 2.7% and 0.6% from the prior year rates. Our effective income tax rate may fluctuate from quarter to quarter for various reasons, including the settlement or resolution of specific federal and state issues. Second quarter 2011 included a significant tax refund associated with the resolution of prior years’ tax matters.

The company’s free cash flow for the first six months of 2012 and 2011 was as follows (in thousands):
  June 24,   June 26,
2012 2011
 
Net cash provided by operating activities $ 65,162 $ 52,925
Purchase of property and equipment   (15,046 )   (12,422 )
Free cash flow * $ 50,116   $ 40,503  
 

*The increase in free cash flow is due to higher operating income and favorable changes in working capital.

We define free cash flow as net cash provided by operating activities (from the consolidated statements of cash flows) less the purchase of property and equipment. We view free cash flow as an important measure because it is one factor that management uses in determining the amount of cash available for discretionary investment. Free cash flow is not a term defined by accounting principles generally accepted in the United States (“GAAP”) and as a result our measure of free cash flow might not be comparable to similarly titled measures used by other companies. Free cash flow should not be construed as a substitute for or a better indicator of the company’s performance than the company’s GAAP measures.

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