INCOME TAXES

The provision (benefit) for income taxes on income (loss) from continuing operations consists of the following:



	2011			2010			2009
Current
Federal	$	725		$	(98	)	$	(4,149	)
State	213			(8		)	(356		)
Total current	938			(106		)	(4,505		)

Deferred
Federal	(234		)	(2,301		)	(4,020		)
State	(20		)	(197		)	(345		)
Total deferred	(254		)	(2,498		)	(4,365		)
Income tax provision (benefit)	$	684		$	(2,604	)	$	(8,870	)

Differences between the provision (benefit) for income taxes and the amount computed by applying the statutory federal income tax rate to income (loss) from continuing operations before taxes are summarized as follows:



	2011			2010			2009
Federal statutory rate	35		%	35		%	35		%
Statutory rate applied to income (loss) from continuing operations before taxes	$	684		$	(2,442	)	$	(17,757	)
Plus state income taxes, net of federal tax effect	130			(185		)	103
Total statutory provision (benefit)	814			(2,627		)	(17,654		)
Increase (decrease) attributable to:
Impairment of goodwill	—			—			8,000
Non-taxable life insurance proceeds	(174		)	—			—
Stock-based compensation	61			149			204
Other items	(17		)	(126		)	580
Total tax provision (benefit)	$	684		$	(2,604	)	$	(8,870	)

During 2009, the Company recognized a $31,406 impairment of goodwill. As a result, the Company's 2009 income tax benefit included a $2,992 benefit from the tax deductible component of the goodwill impairment which resulted in an effective tax benefit rate of 17.5% for 2009.

Income tax payments, net of income tax refunds received for continuing and discontinued operations were $97 in 2011. Income tax refunds received, net of income tax payments were $6,931 in 2010 and $4,895 in 2009.

During the third quarter of 2011, the Company agreed upon a settlement associated with an Internal Revenue Service audit for tax years 2004 through 2009. This settlement agreement resulted in a payable of approximately $1,300 related to certain temporary differences between the carrying amounts of assets for financial reporting purposes and the tax basis of those assets.

Thus, the settlement agreement resulted in an increase in deferred tax assets and had no material impact on earnings. The payable is estimated to be paid in the first quarter of 2012.

Significant components of the Company's deferred tax assets and liabilities are as follows:



	2011			2010
Deferred tax assets:
Inventories	$	2,309		$	1,773
Retirement benefits	3,731			3,774
Federal/State net operating losses	3,803			3,124
Federal/State tax credit carryforwards	2,077			1,603
Allowances for bad debts, claims and discounts	1,892			2,194
Other	5,376			6,001
Total deferred tax assets	19,188			18,469
Valuation allowance	(4,979		)	(4,526		)
Net deferred tax assets	14,209			13,943

Deferred tax liabilities:
Property, plant and equipment	13,153			13,175
Total deferred tax liabilities	13,153			13,175

Net deferred tax asset	$	1,056		$	768



Balance sheet classification:	2011		2010
Current deferred tax assets	$	5,860	$	5,527
Non-current deferred tax liabilities	4,804		4,759
Net deferred tax asset	$	1,056	$	768

At December 31, 2011, $3,803 of deferred tax assets related to approximately $74,166 of federal and state tax net operating loss carryforwards and $2,077 federal and state tax credit carryforwards were available to the Company that will expire in five to twenty years. A valuation allowance of $4,979 is recorded to reflect the estimated amount of deferred tax assets that may not be realized during the carryforward periods. At December 31, 2011, the Company is in a net deferred tax asset position of $1,056. The Company performed an analysis related to the net deferred tax asset and believes that the net tax asset is recoverable in future periods, including a $901 federal income tax credit carryforward and federal net operating loss carryforward.

Tax Uncertainties

The Company accounts for uncertainty in income tax positions according to FASB guidance relating to uncertain tax positions. Unrecognized tax benefits were $16 at December 31, 2011 and $47 at December 25, 2010. Due to the Company's valuation allowances, such benefits, if recognized, would not significantly affect the Company's effective tax rate. There were no significant interest or penalties accrued as of December 31, 2011 or December 25, 2010. The Company does not expect its unrecognized tax benefits to change significantly during the next twelve months.

The following is a summary of the change in the Company's unrecognized tax benefits:



	2011			2010			2009
Balance at beginning of year	$	47		$	52		$	332
Additions based on tax positions taken during a prior period	—			17			—
Reductions related to settlement of tax matters	(17		)	—			(216		)
Reductions related to a lapse of applicable statute of limitations	(14		)	(22		)	(64		)
Balance at end of year	$	16		$	47		$	52

The Company and its subsidiaries are subject to United States federal income taxes, as well as income taxes in a number of state jurisdictions. The tax years subsequent to 2003 remain open to examination for U.S. federal income taxes. The majority of state jurisdictions remain open for tax years subsequent to 2007. A few state jurisdictions remain open to examination for tax years subsequent to 2006.