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Income Taxes
9 Months Ended
Oct. 02, 2011
Income Taxes [Abstract] 
Income Taxes

14. Income Taxes

The Company’s effective tax rate was (5)% for the nine months ended October 2, 2011. Deferred tax assets are evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies. As of October 2, 2011, deferred tax assets were $0.3 million related to the Company’s federal net operating loss which can be carried back to the 2010 tax year. Management has evaluated all available evidence and has determined that negative evidence continues to outweigh positive evidence for the realization of deferred tax assets outside of the federal net operating loss and as a result continues to provide a valuation allowance against its other deferred tax assets.

The Company is currently under IRS audit for the 2009 tax year and no adjustments have been made in the current period.

On March 17, 2011, Lakes and the Louisiana Department of Revenue entered into a settlement agreement whereby Lakes agreed to pay the Louisiana Department of Revenue $9.0 million in full and final payment related to a tax litigation matter (“Settlement Agreement”). In return, the Louisiana Department of Revenue agreed to dismiss the suit and discharge Lakes from all proceedings and liabilities relating to this matter. As of January 2, 2011, income tax payable included $9.0 million related to this Settlement Agreement. The Company issued the $9.0 million payment to the Louisiana Department of Revenue in March 2011.