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Note 11 - Income Taxes
 12 Months Ended
Sep. 29, 2019
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
11
    INCOME TAXES
 
On
December 22, 2017,
the
2017
Tax Act was signed into law. Among other provisions, the
2017
Tax Act reduces the federal statutory corporate income tax rate from
35%
to
21%.
The reduction of the corporate tax rate caused us to re-measure our deferred tax assets and liabilities to the lower federal base rate of
21%.
We reported a discrete adjustment from revaluing our deferred tax assets and liabilities which resulted in a provisional net decrease in income tax expense of
$24,872,000
for the
13
weeks ended
December 24, 2017.
 
The Securities Exchange Commission issued rules that allow for a measurement period of up to
one
year after the enactment date of the
2017
Tax Act to finalize the recording of the related transitional impact. Apart from any future changes in interpretations, legislative action or changes in accounting standards, we have finalized and recorded the resulting adjustments as of
September 29, 2019
. The impact of the re-measurement did
not
change materially for the
52
weeks ended
September 29, 2019
.
 
Income tax expense (benefit) consists of the following:
 
 
(Thousands of Dollars)
  
2019
    
2018
    
2017
  
                         
Current:
                        
Federal
    
8,763
      
275
      
394
  
State
    
1,171
      
875
      
819
  
Deferred
    
(2,003
 )    
(17,378
 )    
10,398
  
     
7,931
      
(16,228
 )    
11,611
  
 
Income tax expense (benefit) related to continuing operations differs from the amounts computed by applying the U.S. federal income tax rate to income (loss) before income taxes. The reasons for these differences are as follows:
 
 
(Percent of Income (Loss) Before Income Taxes)
  
2019
    
2018
    
2017
  
                         
Computed “expected” income tax expense (benefit)
    
21.0
      
24.7
      
35.0
  
State income tax expense (benefit), net of federal tax impact
    
1.3
      
2.6
      
2.3
  
Net income of associated companies taxed at dividend rates
    
(3.9
 )    
(5.1
 )    
(3.7
 )
Resolution of tax matters
    
1.7
      
(8.4
 )    
2.2
  
Non-deductible expenses
    
3.4
      
2.9
      
1.5
  
Valuation allowance
    
10.8
      
9.9
      
2.6
  
Warrant valuation
    
(0.6
 )    
0.2
      
(10.2
 )
Revaluation of deferred income taxes due to law charges
    
—
      
(79.1
 )    
—
  
Other
    
(0.4
 )    
(0.4
 )    
(0.8
 )
     
33.3
      
(52.7
 )    
28.9
  
 
Net deferred income tax liabilities consist of the following components:
 
 
   
September 29
    
September 30
  
(Thousands of Dollars)
  
2019
    
2018
  
                 
Deferred income tax liabilities:
                
Property and equipment
    
(14,424
 )    
(16,506
 )
Identified intangible assets
    
(15,358
 )    
(18,486
 )
Long-term debt
    
(6,647
 )    
(11,074
 )
Accrued compensation
    
(189
 )    
2,402
  
Investments
    
(3,164
 )    
(6,472
 )
     
(39,782
 )    
(50,136
 )
Deferred income tax assets:
                
Allowance for doubtful accounts and losses on loans    
1,279
      
910
  
Pension and postretirement benefits
    
4,048
      
2,305
  
Operating loss carryforwards
    
41,610
      
41,663
  
Accrued expenses
    
426
      
424
  
Other
    
2,526
      
3,075
  
     
49,889
      
48,377
  
Valuation allowance
    
(39,913
 )    
(37,349
 )
Net deferred income tax liabilities
    
(29,806
 )    
(39,108
 )
 
All deferred taxes are categorized as non-current.
 
A reconciliation of 
2019
and
2018
changes in gross unrecognized tax benefits is as follows:
 
 
(Thousands of Dollars)
  
2019
    
2018
  
                 
Balance, beginning of year
    
16,104
      
13,915
  
Increases (decreases) in tax positions for prior years
    
33
      
132
  
Increases in tax positions for the current year
    
2,472
      
2,567
  
Lapse in statute of limitations
    
(357
 )    
(510
 )
Balance, end of year
    
18,252
      
16,104
  
 
Approximately
$10,665,000
and
$10,312,000
 of the gross unrecognized tax benefit balances for
2019
and
2018
, respectively, relate to state net operating losses which are netted against deferred taxes on our balance sheet. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was
$14,019,000
at
September 29, 2019
. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. The amount of accrued interest related to unrecognized tax benefits was, net of tax,
$848,000
at
September 29, 2019
and
$563,000
at
September 30, 2018
. There were
no
amounts provided for penalties at
September 29, 2019
or
September 30, 2018
.
 
At
September 29, 2019,
we had a deferred tax asset of
$4,255,000
related to disallowed interest expense. 
 
No
significant income tax audits are currently in progress and the Company has
not
received any notices of intent to audit. Certain of the Company's state income tax returns for the year ended
September 29, 2013 
are open for examination. The Federal and remaining state returns are open beginning with the
September 29, 2014 
year.
 
At
September 29, 2019
, we have state tax benefits of approximately
$63,338,000
in net operating loss ("NOL") carryforwards that expire between
2020
and
2039.
 These NOL carryforwards result in a deferred income tax asset of
$50,037,000
at
September 29, 2019
, a portion of which is offset by a valuation allowance.
 
As expected, we reported a taxable income in
2018
in excess of our remaining NOL, so that
no
Federal NOL is available in fiscal year 
2019.