Note 2 - Interim Financial Presentation

3 Months Ended

Mar. 02, 2019

Notes to Financial Statements

Condensed Financial Statements [Text Block]

2

. Interim Financial Presentation

All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. The results of operations for the

three

months ended

March 4, 2019

are

not

necessarily indicative of results for the full fiscal year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form

10

-K for the year ended

November 24, 2018.

Income Taxes and Impact of

the

Tax Cuts and Jobs Act

We calculate an anticipated effective tax rate for the year based on our annual estimates of pretax income and use that effective tax rate to record our year-to-date income tax provision.  Any change in annual projections of pretax income could have a significant impact on our effective tax rate for the respective quarter.

On

December 22, 2017,

The Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act reduced the federal statutory corporate income tax rate from

35%

to

21%

effective

January 1, 2018

for all corporate taxpayers.  Our effective tax rate for the

three

months ended

March 2, 2019

differs from the federal statutory rate of

21%

primarily due to the effects of state income taxes and various permanent differences. 

Because the Act specified the new

21%

tax rate beginning on

January 1, 2018,

we were only subject to the reduced rate for

11

months of

2018.

  Therefore, we computed our income tax expense for fiscal

2018

using a blended federal statutory rate of

22.2%.

  However, our effective tax rate for the

three

months ended

February 24, 2018

was

164.2%

primarily due to a

$2,157

discrete charge to re-measure our deferred tax assets at the lower statutory rate.  Other items impacting our effective tax rate for the

three

months ended

February 24, 2018

included the effects of state income taxes and various permanent differences including the favorable impacts of excess tax benefits on stock-based compensation of

$181

and the Section

199:

Domestic Production Activities Deduction, which was eliminated by the Act for our fiscal

2019

tax return.