Income Taxes (Notes)

12 Months Ended

Jan. 03, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

Current:	2014			2013		2012
Federal	$	29,484		$	25,091	$	34,993
State	4,161			3,802		3,419
	33,645			28,893		38,412
Deferred:
Federal	747			1,953		2,176
State	(258		)	84		1,323
	489			2,037		3,499
Income tax expense	$	34,134		$	30,930	$	41,911

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

	2014		2013		2012
Statutory federal income tax	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	2.5		3.0		2.9
Manufacturing deduction	(3.3	)	(3.2	)	(3.1	)
Changes in unrecognized tax benefits	0.3		0.3		(0.2	)
Other	(1.1	)	(1.1	)	0.3
Effective income tax rate	33.4	%	34.0	%	34.9	%

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 2011 or state income tax examinations prior to 2010.

Deferred Income Taxes

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

Deferred tax assets:	2014			2013
Current:
Warranty and returns liabilities	$	5,753		$	4,376
Compensation and benefits	1,545			1,379
Deferred rent and lease incentives	991			857
Other	709			539
Long-term:
Stock-based compensation	6,843			5,944
Deferred rent and lease incentives	5,527			4,524
Warranty liabilities	1,051			605
Net operating loss and capital loss carryforwards	649			827
Other	—			1,111
Total gross deferred tax assets	23,068			20,162
Valuation allowance	(552		)	(587		)
Total deferred tax assets after valuation allowance	22,516			19,575
Deferred tax liabilities:
Long-term:
Property and equipment	9,873			7,696
Other	424			—
Total gross deferred tax liabilities	10,297			7,696
Net deferred tax assets	$	12,219		$	11,879

At January 3, 2015, we had net operating loss carryforwards for state income tax purposes of $2.3 million, which will expire between 2023 and 2034.

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 - there were no significant unrecognized tax benefits, penalties or interest related to current-year or prior-year tax positions.