INCOME TAXES:

12 Months Ended

Sep. 30, 2012

INCOME TAXES:

INCOME TAXES:

10. INCOME TAXES:

The components of income tax expense from operations for fiscal 2012 and fiscal 2011 consisted of the following:

	2012		2011
Current: Federal	$	3,731,414	$	3,754,455
Current: State		620,164		662,083
		4,351,578		4,416,538
Deferred: Federal		625,137		1,711,375
Deferred: State		56,285		154,087
		681,422		1,865,462
Income tax expense	$	5,033,000	$	6,282,000

The difference between the Company's income tax expense in the accompanying consolidated financial statements and that which would be calculated using the statutory income tax rate of 35% for both fiscal 2012 and fiscal 2011 on income before income taxes is as follows:

	2012			2011
Tax at statutory rate	$	4,340,196		$	5,021,112
Amortization of goodwill and other intangibles		(5,207	)		(5,207	)
Nondeductible business expenses		339,872			1,071,984
State income taxes, net of federal tax benefit		418,316			479,883
Valuation allowance, net operating losses		(4,389	)		(165,460	)
Other		(55,788	)		(120,312	)
	$	5,033,000		$	6,282,000

Temporary differences between the financial statement carrying balances and tax basis of assets and liabilities giving rise to the net deferred tax asset (liabilities) at fiscal year ends 2012 and 2011 relate to the following:

	2012			2011
Deferred tax assets:
Current:
Allowance for doubtful accounts	$	427,450		$	425,373
Accrued expenses		1,208,999			1,095,108
Inventory		457,844			460,684
Other		92,384			8,392
		2,186,677			1,989,557
Noncurrent:
Property and equipment	$	93,428		$	198,907
Net operating loss carry forwards—federal		425,884			471,926
Net operating loss carry forwards—state		623,434			627,823
		1,142,746			1,298,656
Total deferred tax assets		3,329,423			3,288,213
Valuation allowance		(613,188	)		(617,577	)
Net deferred tax assets	$	2,716,235		$	2,670,636
Deferred tax liabilities:
Current:
Trade discounts	$	270,058		$	281,668
		270,058			281,668
Noncurrent:
Property and equipment		2,165,674			1,729,853
Goodwill		968,024			886,943
Intangible assets		1,029,250			807,521
		4,162,948			3,424,317
Total deferred tax liabilities	$	4,433,006		$	3,705,985
Net deferred tax assets (liabilities):
Current	$	1,916,619		$	1,707,889
Noncurrent		(3,633,390	)		(2,743,238	)
	$	(1,716,771	)	$	(1,035,349	)

At September 2012, the Company had a $0.4 million noncurrent deferred tax asset related to federal net operating loss carryforwards. These federal net operating loss carryforwards totaled approximately $1.3 million and were primarily attributable to the Company's fiscal 2002 purchase of Hawaiian Natural Water Company, Inc. ("HNWC"), a wholly owned subsidiary of the Company. The utilization of HNWC's net operating losses is limited by Internal Revenue Code Section 382 to approximately $0.1 million per year through 2022.

At September 2012, the Company had a valuation allowance of approximately $0.6 million against certain state net operating losses, which more likely than not will not be utilized. The Company had no material unrecognized tax benefits, interest, or penalties during either fiscal 2012 or fiscal 2011, and the Company does not anticipate any such items during the next twelve months. The Company's policy is to record interest and penalties directly related to income taxes as income tax expense in the Consolidated Statements of Operations. The Company files income tax returns in the U.S. and various states and the tax years 2009 and forward remain open under U.S. and state statutes.