Deferred income taxes result from differences in the bases of assets and liabilities for tax and accounting purposes.
| |
|
2011 
|
|
|
2010
|
|
Receivables allowance |
|
$ |
53 |
|
|
$ |
34 |
|
Returns allowance |
|
|
180 |
|
|
|
217 |
|
Inventory packaging reserve |
|
|
76 |
|
|
|
61 |
|
Inventory capitalization |
|
|
254 |
|
|
|
333 |
|
Incentive compensation |
|
|
361 |
|
|
|
275 |
|
State taxes |
|
|
16 |
|
|
|
143 |
|
Employee benefits |
|
|
1,483 |
|
|
|
1,371 |
|
Other |
|
|
9 |
|
|
|
44 |
|
Valuation allowance |
|
|
(2,432
|
) |
|
|
(2,478
|
) |
Current tax assets, net |
|
$ |
-
|
|
|
$ |
-
|
|
| |
|
|
|
|
|
|
|
|
State taxes |
|
$ |
282 |
|
|
$ |
280 |
|
Incentive compensation |
|
|
290 |
|
|
|
609 |
|
Pension and health care benefits |
|
|
7,789 |
|
|
|
4,705 |
|
Depreciation |
|
|
(801 |
) |
|
|
(210 |
) |
Net operating loss carry-forward and credits |
|
|
1,484 |
|
|
|
187 |
|
Valuation allowance |
|
|
(9,044
|
) |
|
|
(5,571
|
) |
Non-current tax assets, net |
|
$ |
-
|
|
|
$ |
-
|
|
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. Forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years or losses expected in early future years. Management concluded at the end of 2008 that it was more likely than not that deferred tax assets would not be realized and recorded a full valuation allowance on all deferred tax assets during the fourth quarter of fiscal 2008.
Management reevaluated the need for a full valuation allowance at the end of 2011. Management evaluated 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 our deferred tax assets does not meet the more likely than not standard. Therefore, a full valuation allowance will remain against the net deferred tax assets.
As of October 28, 2011, the Company had federal and state net operating loss carryforwards of approximately $4,223 and $4,793 respectively. These loss carryforwards will expire at various dates from 2012 through 2028.
|
