NOTE 13 - INCOME TAXES

12 Months Ended

Jan. 31, 2016

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 13 – INCOME TAXES

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

	Fifty-Two		Fifty-Two		Fifty-Two
	Weeks Ended		Weeks Ended		Weeks Ended
	January 31,		February 1,		February 2,
	2016		2015		2014
Current expense
Federal	$	7,196	$	6,024	$	3,755
Foreign		41		40		41
State		771		635		403
Total current expense		8,008		6,699		4,199
Deferred taxes
Federal		244		97		214
State		22		24		126
Total deferred taxes		266		121		340
Income tax expense	$	8,274	$	6,820	$	4,539

Total tax expense for fiscal 2016 was $8.6 million, of which $8.3 million was allocated to continuing operations and $277,000 was allocated to other comprehensive income. 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.

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

	Fifty-Two			Fifty-Two			Fifty-Two
	Weeks Ended			Weeks Ended			Weeks Ended
	January 31,			February 1,			February 2,
	2016			2015			2014
Income taxes at statutory rate		35.0	%		35.0	%		34.0	%
Increase (decrease) in tax rate resulting from:
State taxes, net of federal benefit		2.1			2.0			2.1
Domestic Production Deduction		(0.6	)		-			-
Officer's life insurance		(1.1	)		(1.2	)		(1.8	)
Other, net		(1.6	)		(0.6	)		2.1
Effective income tax rate		33.8	%		35.2	%		36.4	%

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

	January 31,			February 1,
	2016			2015
Assets
Deferred compensation	$	4,345		$	4,120
Allowance for bad debts		380			492
State income taxes		43			8
Property, plant and equipment		-			405
Intangible assets		703			524
Charitable contribution carryforward		-			246
Inventories		158			-
Other		378			404
Total deferred tax assets		6,007			6,199
Valuation allowance		-			-
		6,007			6,199
Liabilities
Employee benefits		256			362
Inventories		-			143
Property, plant and equipment		321			-
Total deferred tax liabilities		577			505
Net deferred tax asset without AOCI		5,430			5,694
Deferred tax asset (liability) in AOCI		(80	)		198
Total net deferred tax asset	$	5,350		$	5,892

At January 31, 2016 and February 1, 2015 our net deferred tax asset was $5.4 million and $5.9 million, respectively. We expect to fully realize the benefit of the deferred tax assets in future periods when the amounts become deductible.

At February 1, 2015, we had an uncertain tax position of $284,000 related to our investment in a captive insurance arrangement. The reserve decreased to $74,000 at January 31, 2016.  Also, at February 1, 2015, we had a reserve of $142,000 for an uncertain tax position related to the use of state loss carryforwards in our tax returns. The balance of this reserve was $147,000 at January 31, 2016. We expect $55,000 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 January 31, 2016 and February 1, 2015 are as follows:

	January 31,			February 1,
	2016			2015
Balance, beginning of year	$	482		$	359
Increase related to prior year tax positions		-			75
Decrease related to prior year tax positions		(203	)		-
Increase related to current year tax positions		-			48
Balance, end of year	$	279		$	482

The net unrecognized tax benefits as of January 31, 2016, which, if recognized, would affect our effective tax rate are $221,000. We expect that $74,000 of gross 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 $12,000 and $26,000 was accrued as of January 31, 2016 and February 1, 2015, respectively.

Tax years ending January 30, 2013, through January 31, 2016 remain subject to examination by federal and state taxing authorities. An examination of the fiscal 2013 with federal taxing authorities was completed during fiscal 2016 with no changes. An examination of our North Carolina state tax returns for fiscal year 2012 and 2013 is underway with the North Carolina Department of Revenue.