Income Taxes (Tables)

12 Months Ended

Dec. 28, 2013

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



Current:	2013		2012		2011
Federal	$	25,091	$	34,993	$	23,481
State	3,802		3,419		3,622
	28,893		38,412		27,103
Deferred:
Federal	1,953		2,176		2,434
State	84		1,323		405
	2,037		3,499		2,839
Income tax expense	$	30,930	$	41,911	$	29,942

Reconciliation of income tax expense (benefit) at the statutory federal rate

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



	2013		2012		2011
Statutory federal income tax	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.0		2.9		3.2
Manufacturing deduction	(3.2	)	(3.1	)	(2.9	)
Changes in unrecognized tax benefits	0.3		(0.2	)	(0.8	)
Other	(1.1	)	0.3		(1.4	)
Effective income tax rate	34.0	%	34.9	%	33.1	%

Deferred income taxes

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



Deferred tax assets:	2013			2012
Current:
Warranty and returns liabilities	$	4,376		$	3,040
Compensation and benefits	1,379			1,448
Deferred rent and lease incentives	857			867
Other	539			246
Long-term:
Stock-based compensation	5,944			8,061
Deferred rent and lease incentives	4,524			3,237
Warranty liabilities	605			563
Net operating loss and capital loss carryforwards	827			1,339
Other	1,111			459
Total gross deferred tax assets	20,162			19,260
Valuation allowance	(587		)	(647		)
Total deferred tax assets after valuation allowance	19,575			18,613
Deferred tax liabilities:
Long-term:
Property and equipment	7,696			4,701
Total gross deferred tax liabilities	7,696			4,701
Net deferred tax assets	$	11,879		$	13,912

Reconciliation of unrecognized tax benefits

Reconciliations of the beginning and ending amounts of unrecognized tax benefits for 2013, 2012 and 2011 were as follows (in thousands):



	Federal and State Tax
	2013		2012			2011
Beginning balance	$	213	$	425		$	1,354
Increases related to current-year tax positions	149		18			292
Increases related to prior-year tax positions	112		—			355
Decreases related to prior-year tax positions	—		(230		)	—
Settlements with taxing authorities	—		—			(1,506		)
Lapse of statute of limitations	—		—			(70		)
Ending balance	$	474	$	213		$	425

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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