XML 83 R21.htm IDEA: XBRL DOCUMENT

NOTE 13 - INCOME TAXES

12 Months Ended

Feb. 01, 2015

NOTE 13 – INCOME TAXES

Our provision for income taxes was as follows for the periods indicated:

	Fifty-Two		Fifty-Two		Fifty-Three
	Weeks Ended		Weeks Ended		Weeks Ended
	February 1,		February 2,		February 3,
	2015		2014		2013
Current expense
Federal	$	6,024	$	3,755	$	3,894
Foreign		40		41		50
State		635		403		403
Total current expense		6,699		4,199		4,347

Deferred taxes
Federal		97		214		(35	)
State		24		126		55
Total deferred taxes		121		340		20
Income tax expense	$	6,820	$	4,539	$	4,367

Total tax expense for fiscal 2015 was $6.6 million, of which $6.8 million was allocated to continuing operations and $254,000 benefit was allocated to other comprehensive income. Total tax expense for fiscal 2014 was $4.5 million, of which $4.5 million was allocated to continuing operations and $59,000 benefit was allocated to Other Comprehensive Income. Total tax expense for the fiscal year ended February 3, 2013 was $4.4 million, of which $4.3 million was allocated to continuing operations and $51,000 was allocated to Other Comprehensive Income.

The effective income tax rate differed from the federal statutory tax rate as follows for the periods indicated:

	Fifty-Two			Fifty-Two			Fifty-Three
	Weeks Ended			Weeks Ended			Weeks Ended
	February 1,			February 2,			February 3,
	2015			2014			2013

Income taxes at statutory rate		35.0	%		34.0	%		34.0	%
Increase (decrease) in tax rate resulting from:
State taxes, net of federal benefit		2.0			2.1			2.1
Officer's life insurance		(1.2	)		(1.8	)		(3.1	)
Other, net		(0.6	)		2.1			0.6
Effective income tax rate		35.2	%		36.4	%		33.6	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities for the period indicated were:

	February 1,		February 2,
	2015		2014
Assets
Deferred compensation	$	4,120	$	3,455
Allowance for bad debts		492		448
State income taxes		8		43
Property, plant and equipment		405		370
Intangible assets		524		745
Charitable contribution carryforward		246		608
Inventories		-		148
Other		404		308
Total deferred tax assets		6,199		6,125
Valuation allowance		-		(34	)
		6,199		6,091
Liabilities
Employee benefits		362		320
Inventory		143		-
Total deferred tax liabilities		505		320
Net deferred tax asset without AOCI		5,694		5,771

Deferred tax (asset) liability in AOCI		198		(56	)
Total net deferred tax asset	$	5,892	$	5,715

At February 1, 2015 and February 2, 2014 our net deferred tax asset was $5.9 million and $5.7 million, respectively.

We expect to fully realize the benefit of the deferred tax assets in future periods when the amounts become deductible. Accordingly, there was a decrease in the valuation allowance of $34,000 during the year.

In fiscal 2014, an uncertain tax position of $200,000 related to our investment in a captive insurance arrangement was identified and accrued for. The reserve increased to $284,000 at February 1, 2015. We expect this uncertain tax position will be settled during the next twelve months. Also, in fiscal 2014, we established a reserve of $103,000 for an uncertain tax position related to the use of state loss carryforwards in our tax returns. The balance of this reserve was $142,000 at February 1, 2015. We expect $53,000 of this uncertain tax position to be settled during the next twelve months.

Current accounting standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also addresses de-recognition, classification, interest and penalties, accounting in interim periods and disclosures.

A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the fiscal years ended February 1, 2015 and February 2, 2014 are as follows:

	February 1,		February 2,
	2015		2014

Balance, beginning of year	$	359	$	-
Increase related to prior year tax positions		75		279
Decrease related to prior year tax positions		-		-
Increase related to current year tax positions		48		80
Balance, end of year	$	482	$	359

The net unrecognized tax benefits as of February 1, 2015, which, if recognized, would affect our effective tax rate are $426,000. $336,000 of this balance is recorded in our current income tax accrual and the balance of $90,000 is recorded in the non-current portion our income tax accrual. Due to taxing authorities' examinations discussed below, we expect that $350,000 of unrecognized tax benefits will decrease within the next year.

We have elected to classify interest and penalties recognized with respect to unrecognized tax benefits as income tax expense. Interest expense of $26,000 and $3,000 was accrued as of February 1, 2015 and February 2, 2014, respectively.

Tax years beginning January 30, 2012, through February 1, 2015 remain subject to examination by federal and state taxing authorities. An examination of the fiscal 2013 year is currently underway with federal taxing authorities. Also, North Carolina taxing authorities have indicated they will begin an examination of the same year in April 2015.

- 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.

+ References+ Details