Income Taxes

12 Months Ended

Dec. 01, 2012

Income Taxes

Income Taxes

11. Income Taxes

        The income tax benefit on continuing operations for fiscal 2012, fiscal 2011 and fiscal 2010 is summarized as follows:

	For the Fiscal Years Ended,
	Dec. 1, 2012			Dec. 3, 2011			Nov. 27, 2010
Current federal	$	5		$	6		$	327
Current state and local		—			(113	)		—
Deferred federal		214			1,534			2,497
Deferred state and local		(106	)		(242	)		334
Total income tax benefit	$	113		$	1,185		$	3,158

        Griffin did not recognize a current tax benefit in fiscal 2012, fiscal 2011 or fiscal 2010 from the exercise of employee stock options. A benefit was not recorded in fiscal 2012 because Griffin utilized net operating loss carryforwards to offset taxable income. In fiscal 2011 and fiscal 2010, Griffin did not have taxable income. As of December 1, 2012, Griffin has an unrecognized tax benefit of $1,123 for the effect of employee stock options exercised in fiscal years 2006 through 2012. In fiscal 2012, the deferred tax asset related to non-qualified stock options was reduced by $38 as a result of exercises and forfeitures of those options. There were no adjustments to deferred tax assets for exercises and forfeitures of non-qualified stock options in fiscal 2011 and fiscal 2010.

        Included in the income of Griffin's discontinued operation are income tax expense of $1,460, $374 and $344 for fiscal 2012, fiscal 2011 and fiscal 2010, respectively.

        Other comprehensive income includes deferred tax (expense) benefit as follows:

	For the Fiscal Years Ended,
	Dec. 1, 2012			Dec. 3, 2011		Nov. 27, 2010
Mark to market adjustment on Centaur Media plc	$	(427	)	$	735	$	(146	)
Fair value adjustment of Griffin's cash flow hedges		287			346		263
Measurement of the funded status of the defined postretirement plan		29			21		(116	)
Total income tax (expense) benefit included in other comprehensive income (loss)	$	(111	)	$	1,102	$	1

        The differences between the income tax benefit at the United States statutory income tax rates and the actual income tax benefit on continuing operations for fiscal 2012, fiscal 2011 and fiscal 2010 are as follows:

	For the Fiscal Years Ended,
	Dec. 1, 2012			Dec. 3, 2011			Nov. 27, 2010
Tax benefit at statutory rate	$	278		$	1,464		$	2,861
State and local taxes, including valuation allowance, net of federal tax effect		(69	)		(230	)		217
Permanent items		(65	)		(63	)		(40	)
Other		(31	)		14			120
Total income tax benefit	$	113		$	1,185		$	3,158

        The income tax benefit in fiscal 2012, fiscal 2011 and fiscal 2010 is net of the effect of recording 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 allowances in fiscal 2012 and fiscal 2010 were charges of $44 and $50, respectively, less federal income tax benefits of $15 and $22, respectively. 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 establishment of the valuation allowances 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 certain state net operating loss carryforwards. The 2012 state and local income tax expense, net of federal tax effect, principally reflects deferred tax expense due to the variations in income apportionment among Griffin's multiple state filings.

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

	Dec. 1, 2012			Dec. 3, 2011
Deferred tax assets:
Deferred revenue	$	1,514		$	672
Retirement benefit plans		1,222			1,054
Cash flow hedges		1,180			893
State net operating loss carryforwards		855			1,153
Non-qualified stock options		608			487
Federal net operating loss carryforwards		521			2,924
Inventories		371			766
Investment in Centaur Media plc		310			737
Investment in Shemin Nurseries Holding Corp.		301			436
Conditional asset retirement obligations		117			117
Allowance for doubtful accounts receivable		50			51
Other		348			416
Total deferred tax assets		7,397			9,706
Valuation allowance		(319	)		(290	)
Net deferred tax assets		7,078			9,416
Deferred tax liabilities:
Real estate assets		(3,015	)		(4,393	)
Deferred rent		(787	)		(966	)
Prepaid insurance		(147	)		(166	)
Property and equipment		(105	)		(118	)
Other		(277	)		(114	)
Total deferred tax liabilities		(4,331	)		(5,757	)
Net total deferred tax assets	$	2,747		$	3,659

        Deferred income taxes on Griffin's consolidated balance sheets at December 1, 2012 and December 3, 2011 are classified as follows:

	December 1, 2012									December 3, 2011
	Current			Noncurrent			Total			Current			Noncurrent			Total
Asset	$	722		$	6,356		$	7,078		$	824		$	8,592		$	9,416
Liability		(197	)		(4,134	)		(4,331	)		(210	)		(5,547	)		(5,757	)
	$	525		$	2,222		$	2,747		$	614		$	3,045		$	3,659

        The following increases and decreases to deferred tax assets and liabilities are included as credits and charges, respectively, in Griffin's other comprehensive income (loss):

	For the Fiscal Years Ended,
	December 1, 2012									December 3, 2011								November 27, 2010
	Pre-Tax			Tax (Expense) Benefit			Net-of-Tax			Pre-Tax			Tax (Expense) Benefit		Net-of-Tax			Pre-Tax			Tax (Expense) Benefit			Net-of-Tax
Mark to market adjustment on Centaur Media for the increase (decrease) in fair value	$	1,111		$	(389	)	$	722		$	(2,098	)	$	735	$	(1,363	)	$	783		$	(235	)	$	548
Mark to market adjustment on Centaur Media for the increase (decrease) in exchange gain		110			(38	)		72			1			—		1			(296	)		89			(207	)
Decrease in fair value adjustment on Griffin's cash flow hedges		(776	)		287			(489	)		(934	)		346		(588	)		(711	)		263			(448	)
Actuarial (loss) gain on postretirement benefits program		(77	)		29			(48	)		(56	)		21		(35	)		304			(116	)		188
Other comprehensive income (loss)	$	368		$	(111	)	$	257		$	(3,087	)	$	1,102	$	(1,985	)	$	80		$	1		$	81

        At December 1, 2012, Griffin had federal net operating loss carryforwards of $1,491 which expire principally in nineteen years and state net operating loss carryforwards of approximately $19,023, principally in Connecticut, with expirations ranging from ten to twenty years. Management has determined that a valuation allowance is required for net operating loss carryforwards in certain states (other than Connecticut) related to Imperial. Realization of the tax benefits related to the Connecticut state net operating losses, which are 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 reduced. Although realization of those 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.

        Griffin evaluates each tax position taken in its tax returns and recognizes a liability for any tax position deemed less likely than not to be sustained under examination by the relevant taxing authorities. Griffin believes that its income tax filing positions will be sustained on examination and does not anticipate any adjustments that would result in a material change on its financial statements. As a result, no accrual for uncertain income tax positions has been recorded pursuant to FASB ASC 740-10.

        Griffin's federal income tax return for fiscal 2009 was examined by the Internal Revenue Service and accepted as filed. Federal income tax returns for fiscal 2010 and fiscal 2011 are subject to examination by the Internal Revenue Service. Examinations of Griffin's fiscal 2009, fiscal 2008 and fiscal 2007 New York state income tax returns are currently being performed. In fiscal 2012, the state of Connecticut completed an examination of Griffin's fiscal 2007 tax return. There were no significant adjustments made as a result of that examination. The remaining periods subject to examination for Griffin's significant state return, which is Connecticut, are fiscal 2008 through fiscal 2011.