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Note H - Income Taxes | 12 Months Ended
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Sep. 25, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE H – INCOME TAXES Income tax expense (benefit) is as follows:
|  | Fiscal year ended |
|  | September 25, |  |  | September 26, |  |  | September 28, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |
Current |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 13,964 |  |  | $ | 1,992 |  |  | $ | 14,078 |
Foreign |  |  | 860 |  |  |  | 193 |  |  |  | 2,111 |
State |  |  | 6,431 |  |  |  | (1,517 | ) |  |  | 5,971 |
Total current expense |  |  | 21,255 |  |  |  | 668 |  |  |  | 22,160 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | (145 | ) |  | $ | 3,139 |  |  | $ | 6,285 |
Foreign |  |  | (353 | ) |  |  | (536 | ) |  |  | 849 |
State |  |  | (2,338 | ) |  |  | (110 | ) |  |  | 2,464 |
Total deferred benefit |  |  | (2,836 | ) |  |  | 2,493 |  |  |  | 9,598 |
Total expense |  | $ | 18,419 |  |  | $ | 3,161 |  |  | $ | 31,758 |
The provisions for income taxes differ from the amounts computed by applying the statutory federal income tax rate of 21% for the fiscal years ended 2021, 2020 and 2019 to earnings before income taxes for the following reasons:
|  | Fiscal year ended |  |  |  |  |
|  | September 25, |  |  | September 26, |  |  | September 28, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |
Income taxes at federal statutory rates |  | $ | 15,545 |  |  | $ | 4,508 |  |  | $ | 26,581 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
State income taxes, net of federal income tax benefit |  |  | 3,233 |  |  |  | (1,285 | ) |  |  | 6,664 |
One-time repatriation tax |  |  | - |  |  |  | - |  |  |  | (885 | )
Increase in gross unrecognized tax benefits |  |  | - |  |  |  | - |  |  |  | 20 |
Share based compensation |  |  | (124 | ) |  |  | (183 | ) |  |  | (777 | )
Non deductible employee compensation |  |  | - |  |  |  | - |  |  |  | 490 |
Other, net |  |  | (235 | ) |  |  | 121 |  |  |  | (335 | )
Income tax expense |  | $ | 18,419 |  |  | $ | 3,161 |  |  | $ | 31,758 |
Net earnings in the year ended September 28, 2019 benefited from a reduction of $885,000 in tax as the provision for the one-time repatriation tax was reduced as the amount recorded in 2018 was an estimate. Excluding the reduction in the provision for the one-time repatriation tax, our effective tax rate was 25.8% in 2019. Net earnings for the 2020 year benefited from a reduction in income tax expense related to state deferred taxes and provision to return adjustments of approximately $2.2 million. Excluding these benefits, our effective tax rate in our fiscal 2020 year was 25.0%. Our effective tax rate in our fiscal 2021 year was 24.9%. Deferred tax assets and liabilities consist of the following:
|  | September 25, |  |  | September 26, |
|  | 2021 |  |  | 2020 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Vacation accrual |  | $ | 1,359 |  |  | $ | 1,460 |
Capital loss carry forwards |  |  | 14 |  |  |  | 161 |
Unrealized gains/losses |  |  | 598 |  |  |  | 345 |
Insurance accrual |  |  | 3,918 |  |  |  | 3,060 |
Operating lease liabilities |  |  | 16,235 |  |  |  | 16,368 |
Deferred income |  |  | 30 |  |  |  | 105 |
Allowances |  |  | 2,155 |  |  |  | 2,863 |
Inventory capitalization |  |  | 1,108 |  |  |  | 1,058 |
Share-based compensation |  |  | 1,754 |  |  |  | 1,637 |
Net Operating Loss |  |  | 617 |  |  |  | 697 |
Payroll Tax Accrual |  |  | 2,307 |  |  |  | - |
Plant shutdown impairment costs |  |  | - |  |  |  | 1,721 |
Foreign tax credit |  |  | 404 |  |  |  | 404 |
Total deferred tax assets |  |  | 30,499 |  |  |  | 29,879 |
Valuation allowance |  |  | (612 | ) |  |  | (506 | )
Total deferred tax assets, net |  |  | 29,887 |  |  |  | 29,373 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Amortization of goodwill and other intangible assets |  |  | 31,540 |  |  |  | 29,587 |
Depreciation of property and equipment |  |  | 44,924 |  |  |  | 48,303 |
Right-of-use assets |  |  | 14,773 |  |  |  | 15,605 |
Accounting method change 481 (a) |  |  | 228 |  |  |  | 291 |
Total deferred tax liabilities |  |  | 91,465 |  |  |  | 93,786 |
Total deferred tax liabilities, net |  | $ | 61,578 |  |  | $ | 64,413 |
As of September 25, 2021, we have federal and state capital loss carry forwards of approximately $2,209,000 primarily from the sale of marketable securities in fiscal year 2016 and unrealized losses incurred in fiscal years 2019 and 2020. These carry forwards began to expire in 2021. Except for current year usage, we have no foreseeable capital gains that would allow us to use this asset. Accordingly, we have recorded a valuation allowance for the full amount of this deferred tax asset. As of September 25, 2021, we have a federal net operating loss carry forward of approximately $2.9 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 tax asset and accordingly, have not recorded a valuation allowance for this deferred tax asset. We have undistributed earnings of our Mexican and Canadian subsidiaries. As a result of the Tax Act, we changed our assertion with respect to foreign earnings. We are no longer permanently reinvested in earnings of our foreign subsidiaries for any year. However, due to the impact of the Tax Act and the deemed repatriation of positive accumulated earnings and profits from our foreign subsidiaries in 2017, which resulted in a Sec. 965 liability of $315,000 for our fiscal year ended September 2018, no additional U.S. federal income taxes are anticipated if our undistributed earnings in our Mexican and Canadian subsidiaries were repatriated to the U.S. However, if such funds were repatriated, a portion of the funds remitted may be subject to applicable state income taxes and non-U.S. income and withholding taxes. The amount of unrecognized deferred income tax liabilities related to potential state income tax and foreign withholding taxes is immaterial. The Tax Act was enacted on December 22, 2017 and introduced significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21%. We have updated any provisional amounts related to the Tax Act and accounting for this is now final. The Coronavirus, Aid, Relief and Economic Security (“CARES”) Act was signed into law on March 27, 2020, which introduced and revised numerous provisions including a technical correction to qualified improvement property for assets placed in service after 2017 through 2022 to allow for immediate depreciation to be claimed on these assets and the deferral of employer’s share of certain payroll taxes. As a result of the CARES Act, we deferred $9.0 million of payroll taxes as of September 25, 2021.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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