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Income Taxes

12 Months Ended

Nov. 03, 2017

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 4 - Income Taxes:

The provision (benefit) for taxes on income includes the following:

		November 3. 2017				October 28. 2016
		(53 Weeks)				(52 Weeks)
Current:
Federal		$	4,039			$	3,874
State			450				226
			4,489				4,100
Deferred:
Federal			(321	)			(883	)
State			(169	)			(151	)
			(490	)			(1,034	)
		$	3,999			$	3,066

The total tax provision differs from the expected amount computed by applying the statutory federal income tax rate to income before income taxes as follows:

		November 3, 2017				October 28, 2016
		(53 Weeks)				(52 Weeks)
Provision for federal income taxes at the applicable statutory rate		$	4,373			$	3,684
Increase in provision resulting from state income taxes, net of federal income tax benefit			108				49
Research & development tax credit			-				-
Non-taxable life insurance gain			(459	)			(37	)
Domestic Production Activities Deduction			(375	)			(429	)
Change in valuation allowance			77				-
Other, net			275				(201	)
		$	3,999			$	3,066

Deferred income taxes result from differences in the bases of assets and liabilities for tax and accounting purposes.

		2017				2016
Receivables allowance		$	12			$	7
Returns allowance			264				166
Inventory packaging reserve			129				100
Inventory overhead capitalization			480				524
Employee benefits			544				552
Other			1				1
State taxes			(420	)			(655	)
Incentive compensation			3,399				2,140
Pension and health care benefits			7,736				12,438
Depreciation			(2,105	)			(837	)
Net operating loss carry-forward and credits			77				96
Valuation allowance established against state NOL			(77	)			-
Non-current tax assets, net		$	10,040			$	14,532

Accounting Standards Codification (“ASC”) 740 requires that an entity’s deferred tax assets be reduced by a valuation allowance to the extent its management determines that it is more likely than not that such deferred tax asset, or portion thereof, will not be realized. Management evaluated the realizability of its deferred tax assets to determine the need and appropriateness of a valuation allowance. In its determinations, Management considers items of evidence, both positive and negative, including those items outlined in ASC 740. The Company policy outlines measurable objective criteria that must be met before a release of the valuation allowance will occur. The three criteria set forth in the policy must all be satisfied before the valuation allowance can be reversed. The three criteria were met and the valuation allowance was reversed in its entirety during fiscal year 2015. The Company continues to measure the realizability of its deferred tax assets against the preset criteria. The criteria are as follows: first, the Company’s available federal tax net operating loss (“NOL”) must be zero; second, the prior thirty-six month cumulative book basis pre-tax income (loss), after considering “one-time” events, is positive; third, the Company considers its outlook of near term continued profitable operations and assesses any material negative and positive trends or events on the immediate horizon. As of November 3, 2017, the Company (1) has utilized its entire federal net operating loss, (2) has positive thirty-six month cumulative book income and (3) positive economic factors including more stable commodity markets and current profitable operations are present. Management reevaluated the need for a full valuation allowance as of November 3, 2017 and determined that some of its California NOL may not be utilized. Therefore a valuation allowance of $77 has been provided for such portion of California NOL. Management has concluded that it is more likely than not that the other deferred tax assets as of November 3, 2017 will be realized.

Due to the degree of judgment involved, actual taxable income could differ materially from management’s estimates, or the timing of taxable income could be such that the net operating losses could expire prior to their utilization. Management could determine in the future that the assets are unrealizable, materially decreasing net income in one or more periods. Following recognition, management could reinstate a full valuation allowance should operating performance decline.

As of November 3, 2017 the Company had net operating loss carryforwards of approximately $874 for state purposes. These loss carryforwards will expire at various dates from 2022 through 2033.

In July 2006, the FASB issued guidance to clarify the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. This interpretation prescribed a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The guidance also discussed derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The provisions of this guidance have been incorporated into ASC 740-10.

In November 2015, the FASB issued guidance in ASU 2015-17 concerning the balance sheet classification of deferred taxes in an initiative to reduce complexity in accounting standards. All deferred tax liabilities and assets should now be classified as noncurrent in the statement of financial position to simplify presentation of deferred tax assets. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2016. We have already adopted this guidance and the change is reflected as of October 28, 2016.

As of November 3, 2017, we have provided a liability of $135 for unrecognized tax benefits related to various federal and state income tax matters. A significant portion of this amount would generally reduce our effective income tax rate if recognized in future reporting periods. We have not identified any new unrecognized tax benefits.

As of October 28, 2016, we have provided a liability of $130 for unrecognized tax benefits related to various federal and state income tax matters. A significant portion of this amount would generally reduce our effective income tax rate if recognized in future reporting periods. We have not identified any new unrecognized tax benefits.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

		November 3, 2017				October 28, 2016
		(53 Weeks)				(52 Weeks)

Balance at beginning of year		$	130			$	112
Additions based on tax positions related to the current year			14				16
Additions for tax positions of prior years			-				2
Reductions for tax positions of prior years			(9	)			-
Settlements			-				-

Balance at end of year		$	135			$	130

We recognize any future accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of November 3, 2017, we had approximately $5 in accrued interest and penalties which is included as a component of the $135 unrecognized tax benefit noted above.

Our federal income tax returns are open to audit under the statute of limitations for the fiscal years 2014 through 2016.

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 October 31, 2013 through 2016.

We do not anticipate a significant change to the total amount of unrecognized tax benefits within the next 12 months.