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Note I - Income Taxes

12 Months Ended

Sep. 26, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE I – INCOME TAXES

Income tax expense (benefit) is as follows:

		Fiscal year ended
		September 26,				September 27,				September 28,
		2015				2014				2013
			(in thousands)
Current
U.S. Federal		$	33,348			$	31,506			$	26,492
Foreign			2,260				2,008				2,289
State			6,294				6,693				7,560
Total current expense		$	41,902			$	40,207			$	36,341

Deferred
U.S. Federal		$	(109	)		$	(217	)		$	64
Foreign			(34	)			(58	)			(10	)
State			(23	)			(540	)			14
Total deferred (benefit) expense			(166	)			(815	)			68
Total expense		$	41,736			$	39,392			$	36,409

The change in deferred taxes for the year ended September 27, 2014 does not equal deferred tax expense in the amount of $823,000 as a result of purchase accounting related to the Philly Swirl acquisition.

The provisions for income taxes differ from the amounts computed by applying the statutory federal income tax rate of approximately 35% to earnings before income taxes for the following reasons:

		Fiscal year ended
		September 26,				September 27,				September 28,
		2015				2014				2013
						(in thousands)

Income taxes at federal statutory rates		$	39,172			$	38,922			$	35,277
Increase (decrease) in taxes resulting from:
State income taxes, net of federal income tax benefit			4,196				4,281				4,346
Domestic production activities deduction			(2,100	)			(2,100	)			(1,540	)
Reduction of gross unrecognized tax benefits			-				(161	)			(346	)
Increase in federal valuation allowance			1,366				-				-
Other, net			(898	)			(1,550	)			(1,328	)
Income tax expense		$	41,736			$	39,392			$	36,409

Deferred tax assets and liabilities consist of the following:

		September 26,				September 27,
		2015				2014
		(in thousands)
Deferred tax assets
Vacation accrual		$	1,600			$	1,456
Increase in valuation allowance			1,434				-
Insurance accrual			3,385				3,383
Deferred income			63				53
Allowances			927				1,895
Inventory capitalization			738				745
Share-based compensation			1,480				1,216
Net Operating Loss			1,823				1,956
Total deferred tax assets			11,450				10,704
Valuation allowance			(1,434	)			-

Deferred tax liabilities
Amortization of goodwill and other intangible assets			25,791				24,528
Depreciation of property and equipment			24,748				26,865
Total deferred tax liabilities			50,539				51,393
Total deferred tax liabilities, net		$	40,523			$	40,689

As of September 26, 2015, we have federal and state capital loss carry forwards of approximately $3.9 million from the sale of marketable securities in fiscal year 2015. These carry forwards will expire in 2020. As we have no foreseeable capital gains that would allow us to use this asset, we have recorded a valuation allowance for the full amount of this deferred asset.

As of September 26, 2015, we have a federal net operating loss carry forward of approximately $5 million from the PHILLY SWIRL acquisition. These carry forwards are subject to an annual limitation under Code Section 382 of approximately $378,000 and will expire in 2033. We have determined there are no limitations to the total use of this asset and accordingly, have not recorded a valuation allowance for this deferred tax asset.

We have undistributed earnings of our Mexican and Canadian subsidiaries that are considered to be indefinitely reinvested and accordingly no provision for US federal and state income taxes has been provided thereon.