Note 9 - Income Taxes

12 Months Ended

Sep. 28, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

(9) Income Taxes

The components of the provision for income taxes are as follows:

	Year Ended
(Dollars in thousands)	September 28, 2013		September 29, 2012		October 1, 2011
Provision for income taxes:
Current:
Federal	$	2,124	$	20	$	207
State		257		62		72
		2,381		82		279
Deferred:
Federal		3,571		781		(12	)
State		310		54		221
		3,881		835		209
Income taxes	$	6,262	$	917	$	488
Effective income tax rate		34.8%		33.6%		483.2%

The reconciliation between income taxes computed at the federal statutory rate and the provision for income taxes is as follows:

	Year Ended
(Dollars in thousands)	September 28, 2013					September 29, 2012					October 1, 2011
Provision for income taxes at federal statutory rate	$	6,299		35.0	%	$	954		35.0	%	$	35		34.7	%
Net effect of life insurance policies		(191	)	(1.1	)		(400	)	(14.7	)		(14	)	(13.9	)
Qualified production activities deduction		(165	)	(0.9	)		-		-			-		-
Nondeductible stock option expense		(51	)	(0.3	)		161		5.9			189		187.1
State income taxes, net of federal tax benefit		479		2.7			94		3.5			(20	)	(19.8	)
Valuation allowance		51		0.3			(48	)	(1.8	)		263		260.4
Other, net		(160	)	(0.9	)		156		5.7			35		34.7
Provision for income taxes	$	6,262		34.8%		$	917		33.6%		$	488		483.2%

The components of deferred tax assets and liabilities are as follows:

(In thousands)	September 28, 2013			September 29, 2012
Deferred tax assets:
Defined benefit plans	$	3,245		$	3,556
Accrued expenses, asset reserves and state tax credits		2,467			1,841
Stock-based compensation		1,560			1,878
State net operating loss carryforwards		1,180			1,372
Goodwill, amortizable for tax purposes		986			1,392
Federal net operating loss carryforward		-			1,870
Valuation allowance		(730	)		(679	)
Deferred tax assets		8,708			11,230
Deferred tax liabilities:
Plant and equipment		(12,607	)		(10,637	)
Prepaid insurance and other reserves		(650	)		(722	)
Deferred tax liabilities		(13,257	)		(11,359	)
Net deferred tax liability	$	(4,549	)	$	(129	)

As of September 28, 2013, the Company recorded a current deferred tax asset (net of valuation allowance) of $2.7 million on its consolidated balance sheet in other current assets and a non-current deferred tax liability (net of valuation allowance) of $7.3 million in other liabilities. As of September 29, 2012, the Company recorded a current deferred tax asset (net of valuation allowance) of $4.0 million in other current assets and a non-current deferred tax liability (net of valuation allowance) of $4.1 million in other liabilities. The Company has $22.2 million of state operating loss carryforwards that begin to expire in 2017, but principally expire in 2017 – 2032. The Company has also recorded deferred tax assets for various state tax credits of $261,000, which will begin to expire in 2014 and principally expire between 2014 and 2020.

The realization of the Company’s deferred tax assets is entirely dependent upon the Company’s ability to generate future taxable income in applicable jurisdictions. Accounting principles generally accepted in the U.S. (“GAAP”) requires that the Company periodically assess the need to establish a valuation allowance against its deferred tax assets to the extent the Company no longer believes it is more likely than not that they will be fully utilized. As of September 28, 2013, the Company had recorded a valuation allowance of $730,000 pertaining to various state NOLs and tax credits that were not expected to be utilized. The valuation allowance established by the Company is subject to periodic review and adjustment based on changes in facts and circumstances and would be reduced should the Company utilize the state net operating loss carryforwards against which an allowance had previously been provided or determine that such utilization is more likely than not. The $51,000 increase in the valuation allowance during 2013 is primarily due to the increase of certain state NOLs that are not expected to be utilized.

As of September 28, 2013, the Company has no material, known tax exposures that require the establishment of contingency reserves for uncertain tax positions.

A reconciliation of the beginning and ending balance of total unrecognized tax benefits for 2013 and 2012 is as follows:

(In thousands)	2013			2012
Balance at beginning of year	$	76		$	67
Increase in tax positions of prior years		-			9
Settlement of tax position in current year		(76	)		-
Balance at end of year	$	-		$	76

The Company classifies interest and penalties related to unrecognized tax benefits as part of income tax expense. The accrued interest and penalties related to unrecognized tax benefits was $0 and $56,000, as of September 28, 2013 and September 29, 2012, respectively. There was $6,000 of expense incurred during 2012 related to interest and penalties. The Company did not record any expense related to interest and penalties during 2013 and 2011.    

The Company files U.S. federal income tax returns as well as state and local income tax returns in various jurisdictions. Federal and various state tax returns filed by the Company subsequent to 2008 remain subject to examination together with certain state tax returns filed by the Company subsequent to 2003.