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Income Taxes
9 Months Ended
Sep. 27, 2014
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
The Company calculates its interim income tax provision by estimating the annual effective tax rate and applying that rate to its year-to-date ordinary earnings. The Company's effective income tax rate for the 13-week period ended September 27, 2014 was 49.5%, which resulted in a provision of $4.8 million, while the effective tax rate of the 13-week period ended September 28, 2013 was 51.3%, which resulted in a provision of $6.9 million. The effective tax rate for the third quarter of 2014 as compared to the effective tax rate for the third quarter of 2013 is reduced largely due the partial valuation allowance established during the third quarter of 2013 on the Company's California deferred tax assets. While the Company established a partial valuation allowance on its Canadian deferred tax assets in the third quarter of 2014, the rate effect was less than that of the partial valuation allowance established on the California deferred tax assets from the prior year.
The Company's effective income tax rate for the 39-week period ended September 27, 2014 was 46.8%, which resulted in a provision of $10.8 million, while the effective tax rate for the 39-week period ended September 28, 2013 was 45.0%, which resulted in a provision of $15.6 million. The increase in the effective tax rate is due to the addition of a valuation allowance against the Company's Canadian net deferred tax assets and uncertain tax positions related to Puerto Rican taxes.
The Company continues to maintain a valuation allowance against its California Enterprise Zone ("CA EZ") credits in the amount of $4.4 million, as well as a $0.9 million valuation allowance against South Carolina state tax credits. In addition, during the third quarter of 2014, the Company established a valuation allowance in the net amount of $1.3 million against its Canadian net deferred tax assets, due to the Company's decision to phase out of Canada over the next four years. The Company continues to monitor and adjust these valuation allowances based on current evaluation of its ability to realize these deferred tax assets.
During the three months ended September 27, 2014, the Company recognized an additional $0.3 million gross expense related to uncertain tax positions, including accrued interest and penalties.
The Company files income tax returns in the U.S. federal jurisdiction, various states and cities, and Puerto Rico and Canada. The Company has substantially settled all federal income tax matters through 2008, as well as all state and foreign jurisdictions through 2007 and 2006, respectively, with the exception of open audits of Michigan and Wisconsin for the years 2009 through 2011.