Note 11 - Income Taxes

12 Months Ended

Nov. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

11. Income Taxes

The components of the income tax provision (benefit) are as follows:

	2013		2012			2011
Current:
Federal	$	759	$	1,611		$	3,947
State		50		(487	)		676
Deferred:
Increase (decrease) in valuation allowance		136		(18,704	)		(17,464	)
Federal		1,970		2,458			14,934
State		176		423			2,316
Total	$	3,091	$	(14,699	)	$	4,409

The income tax provision for fiscal 2011 includes a benefit of $6,341 resulting from the utilization of Federal net operating loss carryforwards. Excess tax benefits in the amount of $313 were recognized as additional paid-in capital during fiscal 2013 resulting from the exercise of stock options and the release of restricted shares.

A reconciliation of the statutory federal income tax rate and the effective income tax rate, as a percentage of income before income taxes, is as follows:

	2013			2012			2011
Statutory federal income tax rate		34.0	%		35.0	%		35.0	%
Dividends received deduction		-			-			(1.8	)
Change in income tax valuation allowance		1.7			(155.6	)		(29.2	)
Change in income tax reserves		0.1			(3.3	)		(0.1	)
State income tax, net of federal benefit		3.7			1.5			3.4
Other		(1.7	)		0.1			-
Effective income tax rate		37.8	%		(122.3	)%		7.3	%

The income tax effects of temporary differences and carryforwards, which give rise to significant portions of the deferred income tax assets and deferred income tax liabilities, are as follows:

	November 30, 2013			November 24, 2012
Deferred income tax assets:
Trade accounts receivable	$	618		$	688
Inventories		2,277			1,946
Property and equipment		756			1,688
Notes receivable		1,592			1,592
Retirement benefits		5,626			5,547
State net operating loss carryforwards		2,482			2,309
Unrealized loss from affiliates		988			1,069
Lease termination accruals		349			1,005
Other		2,398			2,580
Gross deferred income tax assets		17,086			18,424
Valuation allowance		(1,044	)		(908	)
Total deferred income tax assets		16,042			17,516
Deferred income tax liabilities:
Unrealized gains from affiliates		755			78
Prepaid expenses and other		135			121
Total deferred income tax liabilities		890			199
Net deferred income tax assets	$	15,152		$	17,317

Due to the losses incurred prior to fiscal 2011, we were in a cumulative loss position for the three years preceding fiscal 2011which is considered significant negative evidence that is difficult to overcome on a “more likely than not” standard through objectively verifiable data. While our long-term financial outlook remained positive, we concluded that our ability to rely on our long-term outlook and forecasts as to future taxable income was limited due to uncertainty created by the weight of the negative evidence. As a result, we previously recorded a valuation allowance on certain of the deferred tax assets. In fiscal 2011, due to the gain recognized on the sale of our interest in IHFC, we were able to utilize net operating loss carryforwards and credits to significantly offset the taxable gain, resulting in a significant reduction of the valuation allowances. However, as the gain on the sale of IHFC did not represent a source of recurring future taxable income, we continued to record a valuation allowance against substantially all of our deferred tax assets as of November 26, 2011. Due to our positive earnings during fiscal 2012, and the absence of any significant negative evidence to the contrary, we concluded that we could rely on our positive long-term outlook and forecasts as to future taxable income in evaluating our ability to realize our deferred tax assets. Accordingly, the reserve against the majority of our deferred tax assets was removed in fiscal 2012, resulting in a credit to income of $18,704, or $1.70 and $1.69 per basic and diluted share, respectively, which is included in our net income tax benefit for that year. The remaining valuation allowance of $1,044 and $908 as of November 30, 2013 and November 24, 2012, respectively, is primarily related to state net operating loss carryforwards for which it is currently considered to be more likely than not that they will not be utilized prior to their expiration.

The following table represents a summary of the valuation allowances against deferred tax assets:

	2013		2012			2011
Balance, beginning of the year	$	908	$	19,612		$	36,806
Additions charged to expense		136		-			-
Deductions reducing expense		-		(18,704	)		(17,464	)
Additions recorded as a component of other comprehensive (income) loss		-		-			270
Balance, end of the year	$	1,044	$	908		$	19,612

We have state net operating loss carryforwards available to offset future taxable state income of $29,211, which expire in varying amounts between 2014 and 2030. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards.

Net income taxes paid during 2013, 2012 and 2011 were $2,723, $2,010, and $3,651, respectively.

As of November 30, 2013, the gross amount of unrecognized tax benefits was approximately $1,497 exclusive of interest and penalties. Of this balance, if we were to prevail on all unrecognized tax benefits recorded, approximately $239 would benefit the effective tax rate. As of November 24, 2012, the gross amount of unrecognized tax benefits was approximately $1,228, exclusive of interest and penalties. Of this balance, if we were to prevail on all unrecognized tax benefits recorded, approximately $175 would benefit the effective tax rate. We regularly evaluate, assess and adjust the related liabilities in light of changing facts and circumstances, which could cause the effective tax rate to fluctuate from period to period.

The following table summarizes the activity related to our gross unrecognized tax benefits:

	2013			2012
Balance, beginning of the year	$	1,228		$	1,502
Gross increases		401			10
Gross decreases, primarily due to the expiration of statutes		(132	)		(284	)
Balance, end of the year	$	1,497		$	1,228

We recognize interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal 2013, 2012, and 2011, we recognized $(23), $(63), and $67 of interest expense (expense recovery) and $31, $57, and $46 of penalty expense recovery, respectively, related to the unrecognized benefits noted above in our consolidated statements of income. At November 30, 2013 and November 30, 2012, the consolidated balance sheets include accrued interest of $140 and $164, and penalties of $10 and $40, respectively, due to unrecognized tax benefits.

Significant judgment is required in evaluating the Company's federal and state tax positions and in the determination of its tax provision. Despite our belief that the liability for unrecognized tax benefits is adequate, it is often difficult to predict the final outcome or the timing of the resolution of any particular tax matter. We may adjust these liabilities as relevant circumstances evolve, such as guidance from the relevant tax authority, or resolution of issues in the courts. These adjustments are recognized as a component of income tax expense in the period in which they are identified. The Company also cannot predict when or if any other future tax payments related to these tax positions may occur.

We remain subject to examination for tax years 2010 through 2012 for all of our major tax jurisdictions.

The IRS released the final and re-proposed tangible property regulations in September of 2013. While the regulations are now final, they are effective for tax years beginning on or after January 1, 2014, which for the Company will be fiscal 2015.