XML 26 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
Note 5 - Income Taxes
 6 Months Ended
Apr. 13, 2012
Income Tax Disclosure [Text Block]
Note 5 – Income Taxes:

The Company expects its effective tax rate for the 2012 fiscal year to be different from the federal statutory rate due to state taxes and a change in valuation allowance as follows

Effective tax rate and benefit
 
%
 
Federal statutory rate
   
34.0
 
State taxes
   
5.2
 
Change in valuation allowance
   
-36.0
 
Other
   
-3.2
 
Total effective tax rate and tax benefit
   
0.0
 

We did not record a provision for income taxes for the twenty-four week period ended April 13, 2012, related to federal and state taxes, based on the Company’s expected annual effective tax rate.   We recorded tax expense for non income related taxes of $48 which are reflected in selling, general and administrative expenses.

Management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversals of existing taxable temporary differences.  Management reevaluated the need for a full valuation allowance at April 13, 2012 based on both positive and negative evidence.  The weight of negative factors and level of economic uncertainty in our current business continued to support the conclusion that the realization of its deferred tax assets does not meet the more likely than not standard.  As a result of this evaluation, a full valuation allowance remained against the net deferred tax assets as of April 13, 2012. Management will continue to periodically reevaluate the valuation allowance and, to the extent that conditions change, some or all of such valuation allowance could be reversed in future periods.  The Company has established objective criteria that must be met before a release of the valuation allowance will occur.

Our federal income tax returns are open to audit under the statute of limitations for the fiscal years ended October 31, 2008 through October 28, 2011. We are subject to income tax in California and various other state taxing jurisdictions. Our state income tax returns are open to audit under the statute of limitations for the fiscal years ended November 2, 2007 through October 28, 2011.