Note 7 - Income Taxes

12 Months Ended

May. 02, 2015

7.	INCOME TAXES

The provision for income taxes consisted of the following:

	(In thousands)
	Fiscal		Fiscal		Fiscal
	2015		2014		2013
Current	$	24,326	$	19,395	$	23,359
Deferred		1,076		79		172
Total	$	25,402	$	19,474	$	23,531

Deferred taxes are recorded to give recognition to temporary differences between the tax bases of assets or liabilities and their reported amounts in the financial statements. Valuation allowances are established to reduce the carrying amounts of deferred tax assets when it is deemed more likely than not that the benefit of deferred tax assets will not be realized. Deferred tax assets and liabilities as of May 2, 2015 and May 3, 2014 consisted of the following:

	(In thousands)
	2015		2014
Deferred tax assets:
Accrued expenses and other	$	5,281	$	4,126
Inventory and amortizable assets		417		400
Total deferred tax assets		5,698		4,526
Deferred tax liabilities:
Property		16,497		15,616
Intangibles and other		98		98
Total deferred tax liabilities		16,595		15,714
Net deferred tax liabilities	$	10,897	$	11,188
Current deferred tax assets – net	$	4,348	$	2,685
Noncurrent deferred tax liabilities – net	$	15,245	$	13,873

The reconciliation of the statutory federal income tax rate to our effective tax rate is as follows:

	Fiscal			Fiscal			Fiscal
	2015			2014			2013
Statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		2.3			2.3			1.6
Manufacturing deduction benefit		(3.0	)		(3.0	)		(3.1	)
Adjustment of unrecognized tax benefit		(.2	)		(3.3	)		(.2	)
Other differences		(.1	)		(.1	)		.1
Effective income tax rate		34.0	%		30.9	%		33.4	%

During April 2014, the Company reached an agreement with the Internal Revenue Service with respect to its review of the Company’s federal income tax returns for the three years ended April 2013. No material adjustments were proposed and, accordingly, the Company adjusted the related unrecognized tax benefits during the fourth quarter of Fiscal 2014.

As of May 2, 2015, the gross amount of unrecognized tax benefits was $1.8 million and $191,000 was recognized as a tax benefit in Fiscal 2015. If we were to prevail on all uncertain tax positions, the net effect would be to reduce our tax expense by approximately $1.2 million. A reconciliation of the changes in the gross amount of unrecognized tax benefits, which amounts are included in other liabilities in the accompanying consolidated balance sheets, is as follows:

	(In thousands)
	Fiscal			Fiscal			Fiscal
	2015			2014			2013
Beginning balance	$	2,123		$	4,349		$	4,548
Increases due to current period tax positions		122			268			415
Decreases due to lapse of statute of limitations and audit resolutions		(444	)		(2,494	)*		(614	)
Ending balance	$	1,801		$	2,123		$	4,349

_______________________________

Includes $1,907 related to the Internal Revenue Service review of the Company’s federal income tax returns for the three years ended April 2013 noted above.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of May 2, 2015, unrecognized tax benefits included accrued interest of $269,000, of which approximately $82,000 was recognized as a tax benefit in Fiscal 2015.

We file annual income tax returns in the United States and in various state and local jurisdictions. A number of years may elapse before an uncertain tax position, for which we have unrecognized tax benefits, is resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, we believe that our unrecognized tax benefits reflect the most probable outcome. We adjust these unrecognized tax benefits, as well as the related interest, in light of changing facts and circumstances. The resolution of any particular uncertain tax position could require the use of cash and an adjustment to our provision for income taxes in the period of resolution. Federal income tax returns for fiscal years subsequent to 2013 are subject to examination. Generally, the income tax returns for the various state jurisdictions are subject to examination for fiscal years ending after fiscal 2010.