Income Taxes (Notes)

12 Months Ended

Dec. 29, 2012

Income Taxes [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

Income tax expense consisted of the following (in thousands):

Current:	2012		2011		2010
Federal	$	34,993	$	23,481	$	15,812
State	3,419		3,622		758
	38,412		27,103		16,570
Deferred:
Federal	2,176		2,434		564
State	1,323		405		1,788
	3,499		2,839		2,352
Income tax expense	$	41,911	$	29,942	$	18,922

The following table provides a reconciliation between the statutory federal income tax rate and our effective income tax rate:

	2012		2011		2010
Statutory federal income tax	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	2.9		3.2		2.9
Manufacturing deduction	(3.1	)	(2.9	)	(2.7	)
Changes in unrecognized tax benefits	(0.2	)	(0.8	)	1.8
Other	0.3		(1.4	)	0.5
Effective income tax rate	34.9	%	33.1	%	37.5	%

We file income tax returns with the U.S. federal government and various state jurisdictions. In the normal course of business, we are subject to examination by federal and state taxing authorities. We are no longer subject to federal income tax examinations for years prior to 2009 or state income tax examinations prior to 2008.

Deferred Income Taxes

The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands):

Deferred tax assets:	2012			2011
Current:
Compensation and benefits	$	1,448		$	1,175
Warranty and returns liabilities	3,040			2,492
Deferred rent and lease incentives	867			862
Other	246			107
Long-term:
Property and equipment	—			1,119
Stock-based compensation	8,061			6,380
Deferred rent and lease incentives	3,237			2,411
Warranty liability	563			1,047
Net operating loss and capital loss carryforwards	1,339			2,090
Other	459			417
Total gross deferred tax assets	19,260			18,100
Valuation allowance	(647		)	(693		)
Total deferred tax assets after valuation allowance	18,613			17,407
Deferred tax liabilities:
Long-term:
Property and equipment	4,701			—
Total gross deferred tax liabilities	4,701			—
Net deferred tax assets	$	13,912		$	17,407

At December 29, 2012, we had net operating loss carryforwards for state income tax purposes of $15.8 million which will expire between 2013 and 2032.

We evaluate our deferred income taxes quarterly to determine if valuation allowances are required. As part of this evaluation, we assess whether valuation allowances should be established for any deferred tax assets that are not considered more likely than not to be realized, using all available evidence, both positive and negative. This assessment considers, among other matters, the nature, frequency, and severity of historical losses, forecasts of future profitability, taxable income in available carryback periods and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2012, 2011 and 2010 was as follows (in thousands): 

	Federal and State Tax
	2012			2011			2010
Beginning balance	$	425		$	1,354		$	1,375
Increases related to prior-year tax positions	—			355			621
Decreases related to prior-year tax positions	(230		)	—			(572		)
Settlements with taxing authorities	—			(1,506		)	(138		)
Lapse of statute of limitations	—			(70		)	—
Increases related to current-year tax positions	18			292			68
Ending balance	$	213		$	425		$	1,354

We classify net interest and penalties (not included in the “Federal and State Tax” above) as components of income tax expense. In 2012, 2011 and 2010, we included $20 thousand, $(0.2) million and $0.2 million, respectively, of net penalties and interest in income tax expense. At December 29, 2012, and December 31, 2011, we had accrued interest and penalties of $0.1 million and $0.1 million, respectively.

At December 29, 2012, and December 31, 2011, the total amounts of unrecognized tax benefits for uncertain tax positions that if recognized, would impact the effective tax rate were $0.2 million and $0.5 million, respectively. The amount of unrecognized tax benefits is not expected to change materially within the next 12 months.