Note 7 - Income Taxes

3 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

(7)

Income Taxes

Effective income tax rate

.

Our effective income tax rate was

33.7%

for the

three

- month period ended

December

31,

2016

compared with

34.6%

for the

three

- month period ended

January

2,

2016.

The effective income tax rates for both periods were based upon the estimated rate applicable for the entire fiscal year adjusted to reflect any significant items related specifically to interim periods.

Deferred income taxes.

In

November

2015,

the FASB issued ASU No.

2015

-

17

“Income Taxes (Topic

740)

- Balance Sheet Classification of Deferred Taxes” to simplify the presentation of deferred income taxes. Under this update, all deferred tax assets and liabilities, along with any related valuation allowance, are required to be classified as noncurrent on the balance sheet. Effective

January

2,

2016,

we early adopted ASU No.

2015

-

17

on a prospective basis, which resulted in the reclassification of our current deferred tax asset as a non - current deferred tax liability on our consolidated balance sheet. No prior periods were retrospectively adjusted.

As of

December

31,

2016,

we recorded a deferred tax liability (net of valuation allowance) of

$6.7

million in other liabilities on our consolidated balance sheet. We have

$7.5

million of state net operating loss carryforwards (“NOLs”) that begin to expire in

2017,

but principally expire between

2017

and

2031.

We have also recorded

$87,000

of gross deferred tax assets for various state tax credits that begin to expire in

2018,

but principally expire between

2018

and

2020.

The realization of our deferred tax assets is entirely dependent upon our ability to generate future taxable income in applicable jurisdictions. GAAP requires that we periodically assess the need to establish a reserve against our deferred tax assets to the extent we no longer believe it is more likely than not that they will be fully realized. As of

December

31,

2016

and

October

1,

2016,

we recorded a valuation allowance of

$

280,000

pertaining to various state NOLs and tax credits that were not expected to be utilized. The valuation allowance is subject to periodic review and adjustment based on changes in facts and circumstances and would be reduced should we utilize the state NOLs and tax credits against which an allowance had previously been provided or determine that such utilization was more likely than not.

Uncertainty in income taxes

.

As of

December

31,

2016,

we had no material, known tax exposures that require the establishment of contingency reserves for uncertain tax positions.

We file U.S. federal income tax returns as well as state and local income tax returns in various jurisdictions. Federal and various state tax returns filed subsequent to

2011

remain subject to examination.