| Note 12. Income Taxes |
The
components of the provision for income taxes consist of the following:
| |
|
2014 |
|
2013 |
|
2012 |
| Current: |
|
|
|
|
|
|
| Federal .......................................................................................................................... |
|
$ 571 |
|
$ 506 |
|
$ 7,275 |
| State .............................................................................................................................. |
|
477 |
|
1,748 |
|
1,905 |
| Deferred ........................................................................................................................ |
|
9,164 |
|
72,035 |
|
(2,727) |
| Total income taxes ...................................................................................................... |
|
$ 10,212 |
|
$ 74,289 |
|
$ 6,453 |
| |
|
|
|
|
|
|
| Reconciliation of
effective income tax: |
|
|
|
|
|
|
| Tax at U.S. statutory
rates (35%) ............................................................................. |
|
$ 13,656 |
|
$ 75,762 |
|
$ 10,919 |
| State income taxes,
net of federal benefit ............................................................... |
|
1,369 |
|
5,043 |
|
1,063 |
| Federal income tax
credits ......................................................................................... |
|
(4,298) |
|
(4,249) |
|
(3,517) |
| Share-based payments .............................................................................................. |
|
- |
|
- |
|
25 |
| Tax attributed to
noncontrolling interests .............................................................. |
|
- |
|
(666) |
|
(1,103) |
| Dividends received
deduction ................................................................................. |
|
(3,650) |
|
(2,647) |
|
(963) |
| Valuation allowance
.................................................................................................... |
|
985 |
|
- |
|
- |
| Foreign tax rate
differences......................................................................................... |
|
1,993 |
|
- |
|
- |
| Other ............................................................................................................................. |
|
157 |
|
1,046 |
|
29 |
| Total income taxes ...................................................................................................... |
|
$ 10,212 |
|
$ 74,289 |
|
$ 6,453 |
Income
taxes paid totaled $4,829 in fiscal year 2014, $1,518 in fiscal year 2013, and $16,802 in fiscal year 2012. Income tax refunds
totaled $17 in fiscal year 2014, $52 in fiscal year 2013 and $641 in fiscal year 2012.
As
of September 24, 2014, we had approximately $444 of unrecognized tax benefits, including approximately $61 of interest and penalties,
which are included in other long-term liabilities in the consolidated balance sheet. During fiscal year 2014, we recognized approximately
$37 in potential interest and penalties associated with uncertain tax positions. Our continuing practice is to recognize interest
expense and penalties related to income tax matters in income tax expense. The unrecognized tax benefits of $444 would impact
the effective income tax rate if recognized.
The
following table summarizes the Company’s unrecognized tax benefits, excluding interest and penalties:
| September
28, 2011........................................................................................................................ |
|
$ 1,480 |
| Gross increases – current
period tax positions ...................................................................... |
|
109 |
| Lapse of statute
of limitations ................................................................................................... |
|
(843) |
| September 26,
2012........................................................................................................................ |
|
746 |
| Gross increases – current
period tax positions ...................................................................... |
|
25 |
| Gross decreases-
prior period tax positions.............................................................................. |
|
(6) |
| Lapse of statute
of limitations ................................................................................................... |
(62) |
| September 25,
2013........................................................................................................................ |
|
703 |
| Gross increases – current
period tax positions ................................................................... |
|
37 |
| Gross decreases-
prior period tax positions............................................................................ |
|
(1) |
| Lapse of
statute of limitations .................................................................................................. |
(356) |
| September
24, 2014..................................................................................................................... |
|
$ 383 |
We
file income tax returns which are periodically audited by various foreign, federal, state, and local jurisdictions. With few exceptions,
we are no longer subject to federal, state, and local tax examinations for fiscal years prior to 2011. We believe we have certain
state income tax exposures related to fiscal years 2010 through 2014. Because of the expiration of the various state statutes
of limitations for these fiscal years, it is possible that the total amount of unrecognized tax benefits will decrease by approximately
$216 within 12 months.
Deferred
tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities
and are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse.
Our deferred tax assets and liabilities consist of the following:
| |
|
2014 |
|
2013 |
| Deferred tax assets: |
|
|
|
|
| Insurance reserves
.............................................................................................................................. |
|
$ 3,321 |
|
$ 2,938 |
| Share-based payments
........................................................................................................................ |
|
10 |
|
13 |
| Compensation accruals
....................................................................................................................... |
|
2,276 |
|
1,952 |
| Gift card accruals
................................................................................................................................. |
|
1,303 |
|
942 |
| Net operating loss
credit carryforward ............................................................................................. |
|
1,292 |
|
60 |
| Valuation allowance
on international net operating losses .......................................................... |
|
(1,232) |
|
- |
| Income tax credit
carryforward .......................................................................................................... |
|
1,695 |
|
- |
| Other ...................................................................................................................................................... |
|
2,824 |
|
2,027 |
| Total deferred tax
assets ..................................................................................................................... |
|
11,489 |
|
7,932 |
| |
|
|
|
|
| Deferred tax liabilities: |
|
|
|
|
| Investments .......................................................................................................................................... |
|
88,050 |
|
91,405 |
| Fixed asset basis
difference ............................................................................................................... |
|
4,479 |
|
3,187 |
| Goodwill and intangibles
.................................................................................................................... |
|
4,910 |
|
3,376 |
| Total deferred tax
liabilities ................................................................................................................ |
|
97,439 |
|
97,968 |
| Net deferred tax
liability ...................................................................................................................... |
|
(85,950) |
|
(90,036) |
| Less current portion
............................................................................................................................ |
|
10,812 |
|
(5,511) |
| Long-term liability
................................................................................................................................ |
|
$
(96,762) |
|
$ (84,525) |
Receivables
on the consolidated balance sheet include income tax receivables of $5,050 and $1,662 as of September 24, 2014 and September 25,
2013, respectively. The current deferred tax asset of $10,812 as of September 24, 2014 is included in other current assets on
the consolidated balance sheet. The current deferred tax liability of $5,511 as of September 25, 2013 is included in accrued expenses
on the consolidated balance sheet.
In
September 2013, the IRS issued final and proposed regulations under IRC Sections 162, 263(a), and 168. These regulations provide
guidance regarding the deduction and capitalization of expenditures related to tangible property and the disposition of tangible
depreciable property. The regulations are generally effective for tax years beginning on or after January 1, 2014 and taxpayers
will be allowed to rely on, and early adopt, both the final regulations and the proposed disposition rules to facilitate implementation
efforts. The application of the new regulations did not have a material effect on the Company’s consolidated financial statements. |