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Note 10 - Income Taxes | 12 Months Ended
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Sep. 28, 2019
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | ( 10 ) Income Taxes The components of the provision for income taxes are as follows:
|  | Year Ended |
|  | September 28, |  |  | September 29, |  |  | September 30, |
(Dollars in thousands) |  | 2019 |  |  | 2018 |  |  | 2017 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (126 | ) |  | $ | 8,265 |  |  | $ | 8,269 |
State |  |  | 185 |  |  |  | 906 |  |  |  | 848 |
|  |  | 59 |  |  |  | 9,171 |  |  |  | 9,117 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 1,649 |  |  |  | (2,862 | ) |  |  | 2,455 |
State |  |  | 149 |  |  |  | 55 |  |  |  | 48 |
|  |  | 1,798 |  |  |  | (2,807 | ) |  |  | 2,503 |
Income taxes |  | $ | 1,857 |  |  | $ | 6,364 |  |  | $ | 11,620 |
Effective income tax rate |  |  | 24.9 | % |  |  | 14.9 | % |  |  | 34.0 | %
The reconciliation between income taxes computed at the federal statutory rate and the provision for income taxes is as follows:
|  | Year Ended |
(Dollars in thousands) |  | September 28, 2019 |  |  | September 29, 2018 |  |  | September 30, 2017 |
Provision for income taxes at federal statutory rate |  | $ | 1,566 |  |  |  | 21.0 | % |  | $ | 10,444 |  |  |  | 24.5 | % |  | $ | 11,959 |  |  |  | 35.0 | %
State income taxes, net of federal tax benefit |  |  | 297 |  |  |  | 4.0 |  |  |  | 739 |  |  |  | 1.7 |  |  |  | 598 |  |  |  | 1.8 |
Stock-based compensation |  |  | 90 |  |  |  | 1.2 |  |  |  | (634 | ) |  |  | (1.5 | ) |  |  | - |  |  |  | - |
Valuation allowance |  |  | 24 |  |  |  | 0.3 |  |  |  | (18 | ) |  |  | (0.0 | ) |  |  | (29 | ) |  |  | (0.1 | )
Federal tax return true-up |  |  | (142 | ) |  |  | (1.9 | ) |  |  | (147 | ) |  |  | (0.3 | ) |  |  | - |  |  |  | - |
Change in federal tax rate - Tax Cuts and Jobs Act |  |  | - |  |  |  | - |  |  |  | (3,307 | ) |  |  | (7.8 | ) |  |  | - |  |  |  | - |
Qualified production activities deduction |  |  | - |  |  |  | - |  |  |  | (832 | ) |  |  | (2.0 | ) |  |  | (768 | ) |  |  | (2.2 | )
Other, net |  |  | 22 |  |  |  | 0.3 |  |  |  | 119 |  |  |  | 0.3 |  |  |  | (140 | ) |  |  | (0.5 | )
Provision for income taxes |  | $ | 1,857 |  |  |  | 24.9 | % |  | $ | 6,364 |  |  |  | 14.9 | % |  | $ | 11,620 |  |  |  | 34.0 | %
The components of deferred tax assets and liabilities are as follows:
|  | September 28, |  |  | September 29, |
(In thousands) |  | 2019 |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |
Defined benefit plans |  | $ | 2,661 |  |  | $ | 2,302 |
Stock-based compensation |  |  | 1,259 |  |  |  | 1,120 |
Accrued expenses and asset reserves |  |  | 1,207 |  |  |  | 1,939 |
Federal net operating loss carryforward |  |  | 363 |  |  |  | - |
State net operating loss carryforwards and tax credits |  |  | 120 |  |  |  | 233 |
Valuation allowance |  |  | (257 | ) |  |  | (233 | )
Deferred tax assets |  |  | 5,353 |  |  |  | 5,361 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Plant and equipment |  |  | (10,625 | ) |  |  | (9,490 | )
Prepaid insurance |  |  | (1,311 | ) |  |  | (1,041 | )
Goodwill |  |  | (317 | ) |  |  | (170 | )
Deferred tax liabilities |  |  | (12,253 | ) |  |  | (10,701 | )
Net deferred tax liability |  | $ | (6,900 | ) |  | $ | (5,340 | )
On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted, which, among other changes, reduced the federal statutory corporate tax rate from 35% to 21% effective January 1, 2018. Since our fiscal year ends on the Saturday closest to September 30 rather than the calendar year, we are subject to IRS rules relating to transitional income tax rates. Based on these rules, our federal statutory rate was 24.5% for fiscal 2018 and is 21% for fiscal 2019 and beyond. We remeasured our deferred tax assets and liabilities and adjusted our estimated annual federal income tax rate to incorporate the lower corporate tax rate provided for under the Act in our first quarter tax provision for fiscal 2018, which resulted in a $3.3 million reduction in income tax expense for 2018. As of September 28, 2019 and September 29, 2018, we recorded deferred tax liabilities (net of valuation allowances) of $6.9 million and $5.3 million, respectively, in other liabilities on our consolidated balance sheet. We have $1.7 million of federal net operating loss carryforwards (“NOLs”) and $2.2 million of state NOLs that begin to expire in 2022, but principally expire between 2022 and 2034. We have also recorded deferred tax assets of $8,000 for state tax credits that expire in 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 September 28, 2019, we recorded a valuation allowance of $257,000 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. The $24,000 increase in the valuation allowance during 2019 is primarily due to state NOLs for which a tax benefit is not expected to be realized partially offset by the expiration of state tax credits for which an allowance had been previously recorded. As of September 28, 2019, we had no material, known tax exposures that required the establishment of contingency reserves for uncertain tax positions. We classify interest and penalties related to unrecognized tax benefits as part of income tax expense. There were no interest and penalties related to unrecognized tax benefits incurred during 2019, 2018 and 2017. 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 2014 remain subject to examination.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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