Note 4 - Income Taxes

12 Months Ended

Aug. 30, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

4. Income Taxes

The provision for income taxes consists of the following (in thousands):

Year ended	August 30, 2014		August 31, 2013		August 25, 2012
Current:
Federal	$	54,005	$	39,455	$	43,470
Foreign		3,480		3,999		3,604
State		9,216		6,722		8,066
Total current	$	66,701	$	50,176	$	55,140
Deferred:
Federal	$	6,838	$	17,514	$	540
Foreign		59		151		90
State		1,828		3,083		(25	)
Total deferred	$	8,725	$	20,748	$	605
Total	$	75,426	$	70,924	$	55,745

The following table reconciles the provision for income taxes using the statutory federal income tax rate to the actual provision for income taxes (in thousands):

	August 30, 2014			August 31, 2013			August 25, 2012
Income taxes at the statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes		3.8			3.5			3.5
Adjustments to tax reserves		0.1			-0.1			-0.6
Foreign tax rate differential		-0.5			-0.8			-1.0
Permanent and other		0.2			0.2			0.1
Total		38.6	%		37.8	%		37.0	%

The tax effect of items giving rise to the Company’s deferred tax assets and liabilities is as follows (in thousands):

	August 30, 2014		August 31, 2013
Deferred Tax Assets
Payroll and benefit related	$	16,216	$	16,524
Insurance related		13,935		13,073
Environmental		7,765		7,133
Other		13,682		11,421
Total deferred tax assets	$	51,598	$	48,151
Deferred Tax Liabilities
Tax in excess of book depreciation	$	37,152	$	42,512
Purchased intangible assets		31,100		28,632
Rental merchandise in service		52,745		38,722
Total deferred tax liabilities		120,997		109,866
Net deferred tax liability	$	69,399	$	61,715

The Company has evaluated its deferred tax assets and believes that they will be fully recovered. As a result, the Company has not established a valuation allowance. The Company’s deferred liability related to rental merchandise in service increased from $38.7 million as of August 31, 2013 to $52.7 million as of August 30, 2014 as a result of a change in tax regulations which impacted the timing of certain allowable deductions.

As of August 30, 2014 and August 31, 2013, there was $0.8 million and $0.7 million, respectively, in total unrecognized tax benefits, which if recognized, would favorably impact the Company’s effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense which is consistent with the recognition of these items in prior reporting periods. As of August 30, 2014, the Company had accrued a total of $0.1 million in interest and penalties, in its long-term accrued liabilities. For the year ended August 30, 2014, the Company recognized a nominal expense in its accompanying Consolidated Statement of Income related to interest and penalties. For the year ended August 31, 2013, the Company recognized a nominal benefit in its accompanying Consolidated Statement of Income related to interest and penalties. For the year ended August 25, 2012, the Company recognized a benefit in its accompanying Consolidated Statement of Income related to interest and penalties totaling $0.5 million.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance at August 25, 2012	$	1,051
Additions based on tax positions related to the current year		350
Statute expirations		(475	)
Balance at August 31, 2013	$	926
Additions based on tax positions related to the current year		430
Statute expirations		(186	)
Balance at August 30, 2014	$	1,170

The Company has a significant portion of its operations in the United States and Canada.  It is required to file federal income tax returns as well as state income tax returns in a majority of the U.S. states and also in the Canadian provinces of Alberta, British Columbia, Ontario, Saskatchewan, Quebec and New Brunswick.  At times, the Company is subject to audits in these jurisdictions, which typically are complex and can require several years to resolve. The final resolution of any such tax audits could result in either a reduction in the Company’s accruals or an increase in its income tax provision, both of which could have a material impact on the consolidated results of operations in any given period.

U.S. and Canadian federal income tax statutes have lapsed for filings up to and including fiscal years 2010 and 2006, respectively, and the Company recently concluded an audit of U.S. federal income taxes for 2010 and 2011. With a few exceptions, the Company is no longer subject to state and local income tax examinations for periods prior to fiscal 2009. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.