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9. Income Taxes
 9 Months Ended
Oct. 28, 2012
Income Tax Disclosure [Text Block]
9.           Income Taxes

We recorded income tax expense of $1.4 million for the fiscal 2013 third quarter compared to $563,000 for the prior year third quarter.  The effective tax rates for the fiscal 2013 and fiscal 2012 third quarters were 36.2% and 20.0%, respectively.  The fiscal 2013 effective tax rate is in the range of what we would expect from normal operations. The 20% effective tax rate from the fiscal 2012 third quarter was exceptionally low, primarily due to the tax benefits of the following items, which occurred in the fiscal 2012 third quarter:

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the receipt of the non-taxable proceeds from Company-owned life insurance;

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a higher level of donations of discontinued inventory items than in the fiscal 2013 third quarter;

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the receipt of a non-taxable distribution from our former captive insurance arrangement that did not recur in the fiscal 2013 third quarter; and

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a refund of a previously paid IRS penalty.

We recorded income tax expense of $2.8 million in the first nine months of fiscal 2013 compared to $1.7 million in the comparable prior-year period.  The effective income tax rates for the first nine months of fiscal 2013 and fiscal 2012 were 36.2% and 27.9%, respectively.  The higher effective income tax rate for the fiscal 2013 period was primarily due to:

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a lower permanent benefit from officers’ life insurance policies;

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a change in our federal deferred tax rate from 35.0% to 34.0%, based on forecasted net income for the periods in which the deferred taxes will be payable;

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lower deductions for contributions of discontinued inventory; and

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the receipt of a non-taxable distribution from our former captive insurance arrangement in the first nine months of fiscal 2012 that did not recur in the first nine months of fiscal 2013.