Note 14 - Income Taxes

12 Months Ended

Oct. 01, 2011

Income Tax Disclosure [Text Block]

14.  INCOME TAXES

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.  Significant components of our deferred tax liabilities and assets as of October 1, 2011 and October 2, 2010 are as follows:

	2011			2010
Deferred tax liabilities:
Depreciation	$	(376,000	)	$	(444,000	)
Deferred tax assets:
Deferred compensation		213,000			231,000
Accrued expenses		299,000			382,000
Inventory		160,000			277,000
Amortization		4,000			16,000
Other		7,000			9,000
Total deferred tax assets		683,000			915,000
Net deferred tax assets	$	307,000		$	471,000

We made cash income tax payments, net of refunds, of approximately $1,514,000, $2,592,000, and $2,039,000, in fiscal years 2011, 2010, and 2009, respectively.

Federal and state income tax provisions consist of the following:

	2011		2010		2009
Current:
Federal	$	1,576,000	$	1,803,000	$	2,267,000
State		55,000		80,000		140,000
		1,631,000		1,883,000		2,407,000
Deferred:
Federal		158,000		383,000		(218,000	)
State		6,000		14,000		(12,000	)
		164,000		397,000		(230,000	)
Income tax expense	$	1,795,000	$	2,280,000	$	2,177,000

Income tax expense differs from the amounts computed by applying the federal tax rate to income before income taxes as follows:

	2011			2010			2009
Computed tax at the statutory rate	$	1,882,000		$	2,306,000		$	2,333,000
Increases (decreases):
State income taxes, net of federal tax benefit		40,000			62,000			84,000
Officer's life insurance		(11,000	)		(38,000	)		9,000
Domestic production deduction		(156,000	)		(115,000	)		(151,000	)
Other, net		40,000			65,000			(98,000	)
Income tax expense	$	1,795,000		$	2,280,000		$	2,177,000

The Company has adopted the provisions under ASC Topic 740, “Income Taxes” (“ASC 740”) which require that a position taken or expected to be taken in a tax return be recognized in the financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities.  A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon settlement.  The Company recognizes accrued interest and penalties related to uncertain tax positions as a component of income tax expense in its financial statements.  Management is not aware of any uncertain tax positions as of October 1, 2011 and October 2, 2010.

We file income tax returns in the U.S. federal and various state and local jurisdictions.  While we do business in some other countries, we did not maintain a foreign presence that would subject us to foreign income taxes until after October 1, 2011.  In the normal course of business, we are subject to examination by taxing authorities.  We do not expect to be subject to U.S. federal or state and local income tax examinations by tax authorities in filing jurisdictions for the years before tax year 2006.