| Income Taxes | Note 4 — Income Taxes
The Company’s income tax expense is computed based on the
federal statutory rates and the state statutory rates, net of
related federal benefit. Income tax expense consists of the
following (in thousands):
52 Weeks Ended 52 Weeks Ended 52 Weeks Ended
Current
Federal $ 7,325 $ 8,120 $ 9,299
State 845 761 1,668
Deferred
Federal (1,379 ) 601 93
State (862 ) 42 (54 )
$ 5,929 $ 9,524 $ 11,006
Income tax expense differs from the amount computed by applying the
statutory federal income tax rate to pre-tax
52 Weeks Ended January 28, 52 Weeks Ended January 30, 52 Weeks Ended January 31,
Tax at federal statutory rate $ 5,941 $ 9,134 $ 10,087
State income taxes (net of federal benefit) 598 844 1,106
Tax credits (255 ) (506 ) (207 )
Other (355 ) 52 20
Income tax expense $ 5,929 $ 9,524 $ 11,006
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Company’s
deferred tax assets and liabilities are as follows (in
thousands):
January 28, January 30,
Deferred tax assets:
Accruals $ 3,208 $ 3,383
Inventory valuation 898 754
State tax credit carryforwards 190
—
Deferred rent and other 11,667 10,045
Total deferred tax assets 15,963 14,182
Valuation allowance for deferred tax assets (56 )
—
Net deferred tax assets 15,907 14,182
Deferred tax liabilities:
Depreciation (14,421 ) (14,887 )
Prepaid assets (767 ) (637 )
Total deferred tax liabilities (15,188 ) (15,524 )
Net deferred tax assets (liabilities) $ 719 $ (1,342 )
As of January 28, 2017, the Company has state tax credit
carryforwards of approximately $190,000 expiring in years 2023
through 2028.
Future utilization of the deferred tax assets is evaluated by the
Company and any valuation allowance is adjusted accordingly. At
January 28, 2017, the Company recorded a $56,000 valuation
allowance related to state tax credit carryforwards. At
January 30, 2016, there were no valuation allowances against
the Company’s deferred tax assets. Adjustments could be
required in the future if the Company estimates that the amount of
deferred tax assets to be realized is more or less than the net
amount the Company has recorded.
The Company and one or more of its subsidiaries file income tax
returns in the U.S. federal jurisdiction and various state and
local jurisdictions. The Company is no longer subject to
U.S. federal income tax examinations by authorities for years
prior to 2013. With few exceptions, the Company is no longer
subject to state and local income tax examinations for years prior
to 2010. The Company is not currently engaged in any
U.S. federal, state or local income tax examinations.
A reconciliation of the beginning and ending amount of unrecognized
tax benefits is as follows:
52 Weeks Ended January 28, 52 Weeks Ended
(In
thousands)
Balance at the beginning of the year $ 307 $ 307
Additions based on tax positions related to the current year
—
—
Additions for tax positions of prior years
—
—
Reductions for tax positions of prior years
—
—
Reductions due to settlements
—
—
Reductions due to lapse of the statute of limitations (163 )
—
Balance at the end of the year $ 144 $ 307
Included in the January 28, 2017 and January 30, 2016
balance is $144,000 and $307,000, respectively, of unrecognized tax
benefits that, if recognized, would decrease the Company’s
effective tax rate. In fiscal 2017, it is reasonably possible that
the Company’s unrecognized tax benefits may be reduced by
$144,000 as a result of a lapse of the statute of limitations.
The Company accrues interest on unrecognized tax benefits as a
component of income tax expense. Penalties, if incurred, would be
recognized as a component of income tax expense. The Company had
approximately $122,000 and $247,000 accrued for the payment of
interest and penalties associated with unrecognized tax benefits at
January 28, 2017 and January 30, 2016, respectively. |
