INCOME TAXES

12 Months Ended

Feb. 02, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 5 — INCOME TAXES

The provision for income taxes consists of the following for the years ended:

(dollars in thousands)	2012			2011			2010
Current
Federal	$	15,963		$	9,953		$	13,808
State		(6,480	)		915			1,235
		9,483			10,868			15,043
Deferred
Federal		(1,052	)		6,886			2,070
State		469			(424	)		(172	)
		(583	)		6,462			1,898
	$	8,900		$	17,330		$	16,941

The income tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities as of year-end are presented below:

(dollars in thousands)	2012			2011
Deferred income tax assets:
Accrual for incentive compensation	$	241		$	111
Allowance for doubtful accounts		752			794
Insurance accruals		2,320			2,802
Other accruals		40			186
Net operating loss carryforwards		4,803			6,722
Postretirement benefits other than pensions		-			374
Deferred revenue		657			693
Federal benefit on state reserves		584			3,176
Amortization of intangibles		10,821			8,489
Total deferred income tax assets		20,218			23,347
Less: Valuation allowance		1,995			2,849
Deferred income tax assets, net of valuation allowance		18,223			20,498
Deferred income tax liabilities:
Postretirement benefits		(287	)		-
Property, plant and equipment		(18,996	)		(21,945	)
Inventory valuation		(27,906	)		(26,972	)
Prepaid expenses		-			(1,091	)
Total deferred income tax liabilities		(47,189	)		(50,008	)
Net deferred income tax liabilities	$	(28,966	)	$	(29,510	)

The net operating loss carryforwards are available to reduce state income taxes in future years. These carry-forwards total approximately $112.0 million for state income tax purposes and expire at various times during the fiscal years 2013 through 2032.

We maintain a valuation allowance for state net operating losses that we do not expect to utilize prior to their expiration.During 2012, the valuation allowance decreased $0.9 million, and during 2011, the valuation allowance increased $0.4 million. Based upon expected future income, management believes that it is more likely than not that the results of operations will generate sufficient taxable income to realize the deferred income tax asset after giving consideration to the valuation allowance.

A reconciliation of the statutory federal income tax rate to the effective income tax rate is as follows:

	2012			2011			2010
Income tax provision at statutory rate		35.0	%		35.0	%		35.0	%
Tax credits, principally jobs		(1.0	)		(2.3	)		(1.0	)
State income taxes, net of federal benefit		4.7			(0.2	)		0.8
Permanent differences		0.3			0.5			0.8
Uncertain tax provisions		(12.7	)		0.3			0.1
Change in state valuation allowance		(2.2	)		0.8			0.7
Other		(1.0	)		-			-
Effective income tax rate		23.1	%		34.1	%		36.4	%

A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows:

(in millions)	2012			2011			2010
Beginning balance	$	9.6		$	9.3		$	9.2
Additions for tax position during the current year		0.1			1.1			0.9
Additions for tax positions of prior years		0.1			0.3			0.3
Reductions for tax positions of prior years from lapse of statue		(0.9	)		(1.1	)		(1.1	)
Reductions for settlements of prior year tax positions		(6.8	)		-			-
Ending balance	$	2.1		$	9.6		$	9.3

As of January 28, 2012, our liability for unrecognized tax benefits totaled $9.6 million, of which $7.7 million was recognized as income tax benefit during the periods primarily related to a $6.8 million state income tax settlement in the second quarter of 2012. We had additions of $0.2 million during fiscal 2012, $0.1 million of which resulted from state tax positions during the current year. As of February 2, 2013, our liability for unrecognized tax benefits totaled $2.1 million and is recorded in our consolidated balance sheet within “Other noncurrent liabilities,” all of which, if recognized, would affect our effective tax rate. Examinations by the state jurisdictions are expected to be completed within the next 12 months which could result in a change to our unrecognized tax benefits.

FASB ASC 740 further requires that interest and penalties required to be paid by the tax law on the underpayment of taxes should be accrued on the difference between the amount claimed or expected to be claimed on the tax return and the tax benefit recognized in the financial statements. The Company includes potential interest and penalties recognized in accordance with FASB ASC 740 in the financial statements as a component of income tax expense. As of February 2, 2013, accrued interest and penalties related to our unrecognized tax benefits totaled $0.4 million and $0.1 million, respectively. As of January 28, 2012, accrued interest and penalties related to our unrecognized tax benefits totaled $1.2 million and $0.2 million, respectively. Both accrued interest and penalties are recorded in the consolidated balance sheet within “Other noncurrent liabilities.”

The Company files numerous consolidated and separate company income tax returns in the U.S. federal jurisdiction and in many U.S. state jurisdictions. With few exceptions, we are subject to U.S. federal, state, and local income tax examinations by tax authorities for years 2007-2009. However, tax authorities have the ability to review years prior to these to the extent we utilized tax attributes carried forward from those prior years.