Income Taxes

12 Months Ended

Dec. 03, 2011

Income Taxes

Income Taxes

11. Income Taxes

        The income tax benefit (expense) on continuing operations for fiscal 2011, fiscal 2010 and fiscal 2009 is summarized as follows:

	For the Fiscal Years Ended,
	Dec. 3, 2011			Nov. 27, 2010		Nov. 28, 2009
Current federal	$	6		$	327	$	6,146
Current state and local		(113	)		—		—
Deferred federal		1,534			2,497		(3,040	)
Deferred state and local		(242	)		334		409
Total income tax benefit	$	1,185		$	3,158	$	3,515

        The 2011 state and local income tax expense, net of federal tax effect, principally reflects $113 for a current preference tax payable to the state of Connecticut and approximately $99 of deferred tax expense due to a change in management's judgment that lowered the expected tax benefits to be realized in future years resulting from revised Connecticut alternative base tax estimates and issues raised in a Connecticut audit of a prior return.

        Griffin did not recognize a current tax benefit in fiscal 2011 or fiscal 2010 from the exercise of employee stock options. Griffin recognized a current tax benefit of $174 in fiscal 2009 from the exercise of employee stock options. As of December 3, 2011, Griffin has an unrecognized tax benefit of $1,104 for the effect of employee stock options exercised in fiscal years 2006 to 2011. Additionally, there were no adjustments to deferred tax assets for exercises and forfeitures of non-qualified stock options in fiscal 2011 and fiscal 2010. In fiscal 2009, the deferred tax asset related to non-qualified stock options was reduced by $32 as a result of exercises and forfeitures on those options.

        Other comprehensive income includes deferred tax (expense) benefit in fiscal years 2011, 2010 and 2009 related to the mark to market adjustments on the investment in Centaur Media, in the amounts of $735, ($146) and ($422), respectively; the measurement of the funded status of the defined postretirement plan in the amounts of $21, ($116) and $31, respectively; and the fair value adjustment of Griffin's cash flow hedges in the amounts of $346, $263 and $284, respectively.

        The differences between income tax benefits at the United States statutory income tax rates and the actual income tax benefits on continuing operations for fiscal 2011, fiscal 2010 and fiscal 2009 are as follows:

	For the Fiscal Years Ended,
	Dec. 3, 2011			Nov. 27, 2010			Nov. 28, 2009
Tax benefit at statutory rate	$	1,464		$	2,861		$	3,347
State and local taxes, including valuation allowance, net of federal tax effect		(230	)		217			266
Permanent items		(3	)		(2	)		(3	)
Other		(46	)		82			(95	)
Total income tax benefit	$	1,185		$	3,158		$	3,515

        Included in the results of the discontinued operation are income tax expense of $374, $344 and $328 for fiscal 2011, fiscal 2010 and fiscal 2009, respectively.

        The income tax benefits in fiscal 2011, fiscal 2010 and fiscal 2009 include the recording of valuation allowances on certain state deferred tax assets for state net operating losses of Imperial. The effect on the income tax benefit for the valuation allowance in fiscal 2011 was a credit of $23, less federal income tax expense of $8. The effect on the income tax benefit for the valuation allowance in fiscal 2010 and fiscal 2009 were charges of $50 and $64, respectively, less federal income tax benefits of $22 and $21, respectively. The establishment of the valuation allowance reflects management's determination that it is more likely than not that Imperial will not generate sufficient taxable income in the future to fully utilize the state NOLs.

        The significant components of Griffin's deferred tax assets and deferred tax liabilities are as follows:

	Dec. 3, 2011			Nov. 27, 2010
Deferred tax assets:
Federal net operating loss credit carryforwards	$	2,924		$	2,574
State net operating loss credit carryforwards		1,153			1,407
Retirement benefit plans		1,054			922
Cash flow hedges		893			547
Inventories		766			573
Investment in Centaur Media plc		737			2
Deferred revenue		672			834
Non-qualified stock options		487			330
Investment in Shemin Nurseries Holding Corp.		436			436
Conditional asset retirement obligations		117			133
Allowance for doubtful accounts receivable		51			58
Other		416			370
Total deferred tax assets		9,706			8,186
Valuation allowance		(290	)		(305	)
Net deferred tax assets		9,416			7,881
Deferred tax liabilities:
Real estate assets		(4,393	)		(5,036	)
Deferred rent		(966	)		(853	)
Prepaid insurance		(166	)		(159	)
Property and equipment		(118	)		(147	)
Other		(114	)		(105	)
Total deferred tax liabilities		(5,757	)		(6,300	)
Net total deferred tax assets	$	3,659		$	1,581

        Deferred income taxes included in the accompanying consolidated balance sheets at December 3, 2011 and November 27, 2010 are classified as follows:

	December 3, 2011									November 27, 2010
	Current			Noncurrent			Total			Current			Noncurrent			Total
Asset	$	824		$	8,592		$	9,416		$	635		$	7,246		$	7,881
Liability		(210	)		(5,547	)		(5,757	)		(196	)		(6,104	)		(6,300	)
	$	614		$	3,045		$	3,659		$	439		$	1,142		$	1,581

        At December 3, 2011, Griffin had a federal net operating loss carryforwards of $8.4 million, of which $1.0 million was generated in fiscal 2011 and $7.4 million was generated in fiscal 2010, which expire in twenty years and nineteen years, respectively. Although realization is not assured, Griffin has concluded that its deferred tax asset related to its federal net operating loss carryforward is more likely than not to be realized based on available evidence, including the existence of a sufficient amount of appreciated assets held by Griffin. Accordingly, a valuation allowance on Griffin's federal net operating loss carryfoward was determined to be unnecessary as of December 3, 2011.

        At December 3, 2011, Griffin had state net operating loss carryforwards of approximately $31.2 million, principally in Connecticut, with expirations ranging from eleven to twenty years. Management has determined that a valuation allowance is required for NOLs in certain states (other than Connecticut) related to Imperial. Realization of the tax benefits related to the Connecticut state net operating losses, which were not subject to valuation allowances, and the state effective tax rates at which those benefits will be realized is dependent upon future results of operations. Differences between forecasted and actual future operating results could adversely impact Griffin's ability to realize tax benefits from Connecticut state net operating losses. Therefore, the deferred tax assets relating to Connecticut state net operating loss carryforwards could be reduced in the future if estimates of future taxable income are changed. Although realization of these deferred tax assets is not assured, Griffin believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize those deferred tax assets.