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Selling, General and Administrative - Consolidated Selling, general and administrative expenses decreased $335 (0.8%) when compared to the prior year. Costs for marketing programs, product display racks and fuel increased significantly. Offsetting these increases were a significant reduction in the provision for doubtful accounts receivable, gains related to increased cash surrender values on life insurance policies and higher investment income. Cost control programs instituted by management also helped control this expense category. Income Taxes The effective income tax rate was 58.2%. The increase in effective rate relates to the reduction of tax reserves in the current fiscal year and significant non-taxable gains on life insurance policies. The Company released a portion of tax reserves for state tax estimates during fiscal 2005 as the amount is no longer probable or reasonably estimated in accordance with Statement of Financial Accounting Standards (SFAS) No. 5, “Accounting for Contingencies”. The Company provides tax reserves for federal, state, local and international exposures relating to audit results, tax planning initiatives and compliance responsibilities. The development of these reserves requires judgments about tax issues, potential outcomes and timing, and is a subjective estimate. Although the outcome of these tax audits is uncertain, in management’s opinion adequate provisions for income taxes have been made for potential liabilities emanating from these reviews. Actual outcomes may differ materially from these estimates. Liquidity and Capital Resources (in thousands except share amounts) The Company’s need for operations growth, capital expenses and share repurchases are expected to be met with cash flows provided by operating activities. Cash flows from operating activities:
Over the past three years, cash provided by operating activities was approximately $9,421, which enabled the Company to fund additions to property, plant and equipment in the amount of $5,227 and share repurchases of $830. Significant changes in working capital are as follows: 2007 – Operating cash flows increased due to the sale of trading securities and reductions in accounts receivable and inventories offset by increases in prepaid expenses and other non-current assets. Significant reductions in accounts payable, accrued payroll, advertising and other expenses and the current and non-current portion of long-term liabilities offset cash flow increases during 2007. During the year the Company funded $3,290 toward its defined benefit pension plan. 2006- Operating cash flows decreased due to the purchase of trading securities, increases in other non-current assets and decreases in non-current liabilities. Significant inventory reductions offset these cash flow decreases. During the year the Company funded $2,557 toward its defined benefit pension plan. |
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