C.INCOME TAXES

In calculating the provision for income taxes on an interim basis, the Company uses an estimate of the annual effective tax rate based upon the facts and circumstances known and applies that rate to its ordinary year-to-date earnings or losses. The effect of discrete items, such as unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs. The Company recorded discrete items in the first and second quarters of fiscal 2015 of $0.8 million and $13.0 million, respectively, for transaction costs, which are generally not deductible for income tax purposes, relating to the pending acquisition of the Company discussed in Note A. In addition, in the second quarter of fiscal 2015, the Company recorded two discrete items; an impairment charge and a related adjustment to the fair value of contingent consideration, which are not deductible for income tax purposes (see Note G).

The income tax provision from continuing operations differs from that computed using the statutory federal income tax rates for the following reasons:

	(000’s Omitted)
	Six Months Ended
	March 28, 2015					March 29, 2014
Federal taxes at statutory rates	$	(4,936	)	35.0	%	$	546		35.0	%
State taxes, net of federal tax benefit	(23		)	0.2		138			8.9
Federal manufacturer’s deduction	40			(0.3	)	(141		)	(9.1	)
Impairment charge and change in fair value of contingent consideration (Note G)	(116		)	0.8		716			45.9
Transaction costs (Note A)	4,701			(33.3	)	—			—
Other	(7		)	—		38			2.4
Total	$	(341	)	2.4	%	$	1,297		83.1	%