Income Taxes (Notes)

3 Months Ended

Mar. 30, 2014

The benefit for income taxes for the three months ended March 30, 2014 and March 31, 2013 was comprised of the following:



	Three Months Ended
	March 30, 2014			March 31, 2013
Current	$	32		$	(12	)
Deferred	(3,790		)	(5,284		)
	$	(3,758	)	$	(5,296	)

The benefit for income taxes for the three months ended March 30, 2014 was derived using an estimated effective annual income tax rate for all of 2014 of 33.9%, which excluded any discrete tax adjustments. The Company's estimated effective tax rate for 2014 does not consider the Work Opportunity Tax Credit which expired at the end of 2013. This credit will be reflected in the Company's estimated effective tax rate in the period if and when re-enacted into law.

The benefit for income taxes for the three months ended March 31, 2013 was derived using an estimated effective annual income tax rate for all of 2013 of 41.2%, which excluded any discrete tax adjustments. In January 2013, the United States Congress authorized, and the President signed into law, certain federal tax credits that were reflected in the Company's Federal tax return for 2012. However, since the law was enacted in 2013, the financial statement benefit of such credits totaling $1.0 million was included in the benefit for income taxes in the consolidated statement of operations and comprehensive loss for the three months ended March 31, 2013.

The Company establishes a valuation allowance when it is necessary to reduce deferred tax assets to an amount for which realization is likely. The Company has performed the required assessment of positive and negative evidence regarding the realization of deferred income tax assets in accordance with ASC 740. The Company considered all available positive and negative evidence to determine whether, based on the weight of that evidence, a valuation allowance is needed for some portion or all of its deferred income tax assets. Judgment is used in considering the relative impact of negative and positive evidence. In arriving at these judgments, the weight given to the potential effect of negative and positive evidence is commensurate with the extent to which such evidence can be objectively verified.

In evaluating the objective evidence provided by historical results, the Company considered (among other things) the past three years of cumulative losses, projected reversal of deferred tax liabilities, recent and prospective operating results, the ability to carry-back net operating losses generated through December 30, 2012 against taxable income reported in prior years, and that the first year of expiration of its net operating loss carryforwards is 2033. The Company also considered subjective evidence related to the forecast of expected operating results for the years over the carryforward period. Additionally, the deferred tax liabilities the Company has considered in the assessment of the realization of deferred tax assets will reverse in the carryforward period and same jurisdiction. Based on the analysis of positive and negative evidence, the Company believed that there was enough positive evidence to overcome our cumulative loss position at March 30, 2014, and therefore no valuation allowance of its deferred tax assets of $13.8 million was necessary.

The Company will continue to monitor and evaluate the positive and negative evidence considered in arriving at the above conclusion, in order to assess whether such conclusion remains appropriate in future periods.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of March 30, 2014 and December 29, 2013, the Company had no unrecognized tax benefits and no accrued interest related to uncertain tax positions.

The tax years 2009-2013 remain open to examination by the major taxing jurisdictions to which the Company is subject. Although it is not reasonably possible to estimate the amount by which unrecognized tax benefits may increase within the next twelve months due to the uncertainties regarding the timing of any examinations, the Company does not expect unrecognized tax benefits to significantly change in the next twelve months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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