Income Taxes (Tables)

12 Months Ended

Jan. 02, 2016

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

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



	2015		2014		2013
Statutory federal income tax	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.0		2.5		3.0
Non-taxable acquisition-related transactions	(2.6	)	—		—
Manufacturing deduction	(1.7	)	(3.3	)	(3.2	)
Changes in unrecognized tax benefits	0.3		0.3		0.3
Other	(1.0	)	(1.1	)	(1.1	)
Effective income tax rate	33.0	%	33.4	%	34.0	%

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



	2015			2014
Deferred tax assets:
Current:
Warranty and returns liabilities	$	8,985		$	5,753
Compensation and benefits	2,323			1,545
Deferred rent and lease incentives	1,117			991
Other	3,653			709
Long-term:
Stock-based compensation	8,756			6,843
Deferred rent and lease incentives	5,860			5,527
Warranty liabilities	1,832			1,051
Net operating loss and capital loss carryforwards	7,290			649
Total gross deferred tax assets	39,816			23,068
Valuation allowance	(1,441		)	(552		)
Total deferred tax assets after valuation allowance	38,375			22,516
Deferred tax liabilities:
Long-term:
Property and equipment	26,330			9,873
Other	9,009			424
Total gross deferred tax liabilities	35,339			10,297
Net deferred tax assets	$	3,036		$	12,219

Reconciliations of the beginning and ending amounts of unrecognized tax benefits for 2015, 2014 and 2013 were as follows (in thousands):



	Federal and State Tax
	2015			2014			2013
Beginning balance	$	742		$	474		$	213
Increases related to current-year tax positions	1,277			172			149
Increases related to prior-year tax positions	113			110			112
Decreases related to prior-year tax positions	—			—			—
Lapse of statute of limitations	(55		)	(14		)	—
Settlements with taxing authorities	—			—			—
Ending balance	$	2,077		$	742		$	474