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Note 8 - Income Taxes | 12 Months Ended
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Dec. 28, 2013
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] |
(8) | Income Taxes
The components of the provision for income taxes are as follows (in thousands):
|  | 2013 |  |  | 2012 |  |  | 2011 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |  |  | $ | - |
State |  |  | (68 | ) |  |  | 165 |  |  |  | (439 | )
Foreign |  |  | 6 |  |  |  | 790 |  |  |  | 906 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | - |  |  |  | - |  |  |  | 11,592 |
State |  |  | 56 |  |  |  | (928 | ) |  |  | 2,281 |
Foreign |  |  | - |  |  |  | 839 |  |  |  | 70 |
Income tax expense (benefit) |  | $ | (6 | ) |  | $ | 866 |  |  | $ | 14,410 |
A reconciliation between the statutory federal income tax rate and the effective income tax rate is as follows (in thousands):
|  | 2013 |  |  | 2012 |  |  | 2011 |
Loss before income taxes |  | $ | (2,118 | ) |  | $ | (48,429 | ) |  | $ | (2,652 | )
Statutory federal income tax rate |  |  | 34 | % |  |  | 34 | % |  |  | 34 | %
Income tax expense (benefit) at statutory federal rate |  |  | (720 | ) |  |  | (16,466 | ) |  |  | (902 | )
State income taxes, net of federal tax benefit |  |  | 151 |  |  |  | 124 |  |  |  | 2 |
Permanent difference - Goodwill impairment |  |  | - |  |  |  | 11,448 |  |  |  | - |
Valuation allowance |  |  | 386 |  |  |  | 4,739 |  |  |  | 15,565 |
Effect of lower foreign taxes |  |  | 497 |  |  |  | 296 |  |  |  | (231 | )
Release of state tax reserves |  |  | (70 | ) |  |  | (23 | ) |  |  | (47 | )
Other items, net |  |  | (250 | ) |  |  | 748 |  |  |  | 23 |
Income tax expense (benefit) |  | $ | (6 | ) |  | $ | 866 |  |  | $ | 14,410 |
Effective tax rate |  |  | 0.3 | % |  |  | (1.8 | )% |  |  | (543.4 | )%
Temporary differences that gave rise to deferred tax assets and liabilities are as follows (in thousands):
|  | 2013 |  |  | 2012 |
Deferred tax assets: |  |  |  |  |  |  |  |
Deferred revenue |  | $ | 4,516 |  |  | $ | 4,676 |
Accrued rents |  |  | 1,682 |  |  |  | 1,884 |
Net operating loss carryforwards |  |  | 6,462 |  |  |  | 4,336 |
Intangible assets |  |  | 1,639 |  |  |  | 1,799 |
Deferred compensation |  |  | 2,040 |  |  |  | 2,089 |
Carryforward of tax credits |  |  | 5,453 |  |  |  | 4,585 |
Receivable and investment write-offs |  |  | 624 |  |  |  | 641 |
Stock compensation |  |  | 179 |  |  |  | 179 |
Depreciation |  |  | - |  |  |  | 1,871 |
Other |  |  | 2,555 |  |  |  | 2,054 |
|  |  | 25,150 |  |  |  | 24,114 |
Less: Valuation allowance |  |  | 20,987 |  |  |  | 20,865 |
Total deferred tax assets |  |  | 4,163 |  |  |  | 3,249 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | (184 | ) |  |  | - |
Other |  |  | (3,106 | ) |  |  | (2,321 | )
Total deferred tax liabilities |  |  | (3,290 | ) |  |  | (2,321 | )
Net deferred tax asset |  | $ | 873 |  |  | $ | 928 |
We evaluate the realizability of our deferred tax assets on a quarterly basis. The Company performed an analysis of all available evidence, both positive and negative, consistent with the provisions under the Income Taxes topic of the ASC. Some of the evidence evaluated includes our historical operating performance, the macroeconomic factors contributing to the recent fiscal loss and our forecast of future taxable income, including the availability of prudent and feasible tax planning strategies. In fiscal 2013, the Company remained in a three-year cumulative loss position, which represents negative evidence. The three-year cumulative loss is a significant piece of negative evidence and while management believes that it is primarily a result of losses that were primarily attributable to the recent significant economic conditions and not an indication of continuing operations, ASC 740 requires that objective historical evidence be given more weight than subjective evidence, such as forecasts of future income. Accordingly, in fiscal 2013, the Company continues to maintain a valuation allowance on most of its deferred tax assets. The valuation allowance on deferred tax assets will continue to fluctuate as a result of temporary differences between the financial reporting and tax basis of the assets and liabilities as well as the generation of net operating loss and tax credit carryforwards. Included in the deferred tax asset is $6.5 million related to federal, state and foreign net operating loss carryforwards for which a valuation allowance of $6.5 million has been recorded. US federal net operating loss carryforwards total $14.0 million as of December 28, 2013, and expire in 2032 and 2033. As of December 28, 2013, foreign net operating loss carry forwards total $2.0 million, of which $1.2 million expire in 2034 and $0.8 million do not expire. Also included in the deferred tax asset is $5.5 million related to tax credits for which a valuation allowance of $5.5 million has been recorded. Income taxes and remittance taxes have not been recorded on approximately $8.0 million of undistributed earnings of foreign operations of the Company, because the Company intends to reinvest those earnings indefinitely. It is not practicable to estimate the income tax liability that might be incurred if such earnings were remitted to the United States. The Company had total unrecognized tax benefits of $0.2 million as of December 28, 2013 and December 29, 2012. The Company reviews its uncertain tax positions periodically and accrues interest and penalties accordingly in income tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | Tax Reserve |
Balance as of December 31, 2011 |  | $ | 213 |
Lapse of statute |  |  | (28 | )
Addition to reserve |  |  | - |
Balance as of December 29, 2012 |  |  | 185 |
Lapse of statute |  |  | (139 | )
Audit settlement release |  |  | (4 | )
Addition to reserve |  |  | 7 |
Balance as of December 28, 2013 |  | $ | 49 |
As of December 28, 2013, approximately $0.2 million of the unrecognized tax benefits would impact the Company’s provision for income taxes and effective tax rate if recognized. Management estimates that it is reasonably possible that the total amount of uncertain tax benefits could decrease by as much as $0.1 million within the next 12 months, primarily as a result of the resolution of audits currently in progress and the lapsing of the statute of limitations in certain jurisdictions. The Company’s income before income taxes from domestic and foreign operations (which include the United Kingdom, Canada, France and Ireland), are as follows (in thousands):
|  | 2013 |  |  | 2012 |  |  | 2011 |
Domestic |  | $ | (1,134 | ) |  | $ | (11,550 | ) |  | $ | (6,200 | )
Foreign |  |  | (984 | ) |  |  | (36,879 | ) |  |  | 3,548 |
Total |  | $ | (2,118 | ) |  | $ | (48,429 | ) |  | $ | (2,652 | )
The following tax years remain open in the Company’s major taxing jurisdictions as of December 28, 2013:
United States (Federal) | 2010 through 2013
United Kingdom | 2007 through 2013
Canada | 2010 through 2013
Ireland | 2008 through 2013

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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