Note 2 - Income Taxes

3 Months Ended

Jul. 03, 2011

Income Tax Disclosure [Text Block]

2.           Income Taxes

We evaluate whether a valuation allowance should be established against our net deferred tax assets based on the consideration of all available evidence using a "more likely than not" standard.  Significant weight is given to evidence that can be objectively verified.  The determination to record a valuation allowance is based on the recent history of cumulative losses and losses expected in the near future.  In conducting our analysis, we utilize a consistent approach which considers our current year loss, including an assessment of the degree to which any losses are driven by items that are unusual in nature and incurred to improve future profitability.  In addition, we review changes in near-term market conditions and any other factors arising during the period which may impact our future operating results.

As a result of our previous analysis, we determined that a full valuation allowance against our net deferred tax assets for fiscal 2009 was required.  We will not record income tax benefits in the consolidated financial statements until it is determined that it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets.  As of July 3, 2011, our net deferred tax assets and related valuation allowance totaled $23.5 million.  The Company has federal and state net operating loss carryforwards of $16.5 million and $43.5 million, respectively, which can be carried forward for a period of up to 20 years.

We determined there is no liability related to uncertain tax positions.  When applicable, we recognize interest and penalties related to uncertain tax positions in income tax expense.  The tax years after fiscal 2007 remain open to examination by the Internal Revenue Service.  The tax years after fiscal 2006 remain open to examination by state tax authorities.