Note 11 - Income Taxes

12 Months Ended

Jun. 29, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Note 11. Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company concluded its federal examination by the Internal Revenue Service for fiscal year 2011, however, fiscal years 2012 and 2013 remain subject to federal examination. Due to ongoing state examinations and non-conformity with the federal statute of limitations for assessment, certain states remain open from fiscal 2008.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. At June 29, 2014, the Company has an unrecognized tax position of approximately $0.5 million, including accrued interest and penalties of $0.1 million. The Company believes that no additional significant unrecognized tax positions will be resolved over the next twelve months.

Significant components of the income tax provision from continuing operations are as follows: 

	Years ended
	June 29, 2014			June 30, 2013			July 1, 2012
	(in thousands)
Current provision (benefit):
Federal	$	6,439		$	7,983		$	(1,643	)
State		1,247			1,845			1,155
Foreign		11			-			-
		7,697			9,828			(488	)
Deferred provision (benefit):
Federal		773			(730	)		8,479
State		28			(25	)		(220	)
Foreign		(95	)		-			-
		706			(755	)		8,259
Income tax expense	$	8,403		$	9,073		$	7,771

A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate is as follows:

	Years ended
	June 29, 2014			June 30, 2013			July 1, 2012
Tax at U.S. statutory rates		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		3.7			3.3			4.0
Non-deductible stock-based compensation		-			-			0.6
Non-deductible goodwill amortization		-			-			1.7
Rate differences		1.2			(0.3	)		(1.1	)
Tax credits		(1.7	)		(1.2	)		(1.2	)
Tax settlements		(1.0	)		1.1			-
Other, net		0.4			(1.3	)		(2.2	)
		37.6	%		36.6	%		36.8	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company's deferred income tax assets (liabilities) are as follows:

	Years ended
	June 29, 2014			June 30, 2013
	(in thousands)
Deferred income tax assets:
Net operating loss and credit carryforwards	$	4,342		$	3,230
Accrued expenses and reserves		6,178			5,848
Stock-based compensation		3,420			3,266
Book in excess of tax depreciation		1,322			1,055
Gross deferred income tax assets		15,262			13,399
Less: Valuation allowance		(2,241	)		(1,477	)
		13,021			11,922
Deferred income tax liabilities:
Other intangibles		(6,512	)		(4,049	)
Tax in excess of book depreciation		-			-
		(6,512)			(4,049	)
Net deferred income tax assets	$	6,509		$	7,873

A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The Company has established valuation allowances primarily for net operating loss carryforwards in certain states and its United Kingdom subsidiary. At June 29, 2014 the Company’s federal and foreign net operating loss carryforwards were $2.8 million and $5.1 million respectively, while the tax effected state net operating loss was $3.3 million, before federal benefit, which if not utilized, will begin to expire in fiscal year 2025, indefinitely, and 2015, respectively. The federal net operating loss of $2.8 million is subject to Section 382 limitations of $0.3 million per year.