Income Taxes

12 Months Ended

Dec. 29, 2012

Income Taxes [Abstract]

INCOME TAXES

14. INCOME TAXES

Deferred income tax assets and liabilities are provided to reflect the future tax consequences of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements.

For financial reporting purposes, income before income taxes includes the following components:

	For the year ended
	December 29, 2012		December 31, 2011		January 1, 2011
United States	$	44,957	$	43,513	$	22,344
Foreign		10,896		14,073		9,299
Total	$	55,853	$	57,586	$	31,643

The components of the income tax provision (benefit) are as follows:

	For the year ended
	December 29, 2012			December 31, 2011			January 1, 2011
Current tax expense (benefit):
United States	$	15,396		$	14,034		$	7,985
State and local		924			436			202
Foreign		1,788			3,972			1,434
Total current		18,108			18,442			9,621
Deferred tax expense (benefit):
United States		545			1,095			469
State and local		12			471			263
Foreign		(210	)		(99	)		(110	)
Total deferred		347			1,467			622
Total income tax provision	$	18,455		$	19,909		$	10,243

The reconciliation between the effective income tax rate and the U.S. federal statutory rate is as follows:

	For the year ended
	December 29, 2012			December 31, 2011			January 1, 2011
U.S. federal taxes at statutory rate	$	19,549		$	20,155		$	11,075
Increase (decrease)
Foreign tax credit		(358	)		(1,026	)		(227	)
Domestic production activity deduction		(1,483	)		(1,075	)		(519	)
Research and Development Tax Credit - Current Year		(50	)		(150	)		(150	)
Foreign income taxed at lower rate		(901	)		(1,052	)		(584	)
Nondeductible items		411			1,049			40
State and local taxes, net		935			907			465
Change in reserve		710			440			9
Other		(358	)		661			134
Income tax provision	$	18,455		$	19,909		$	10,243

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income taxes. The temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 29, 2012 and December 31, 2011 are presented below:

	December 29, 2012			December 31, 2011
Deferred tax assets:
Current:
Accrued expenses and other	$	248		$	260
Total current deferred tax assets		248			260
Noncurrent:
Accrued expenses and other		1,426			2,028
Total noncurrent deferred tax assets		1,426			2,028
Deferred tax liabilities:
Noncurrent:
Depreciation		(8,656	)		(8,484	)
Other		—			(461	)
Total noncurrent deferred tax liabilities		(8,656	)		(8,945	)
Net noncurrent deferred tax liability	$	(7,230	)	$	(6,917	)

A valuation allowance to reduce the deferred tax assets reported is required if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. For the fiscal years ended 2012 and 2011, management has determined that a valuation allowance is not required.

The Company intends and has the ability to indefinitely reinvest the earnings of its non-U.S. subsidiaries, which reflect full provision for non-U.S. income taxes, to expand its international operations. These earnings relate to ongoing operations and, at December 29, 2012, cumulative earnings were approximately $53 million. Accordingly, no provision has been made for U.S. income taxes that might be payable upon repatriation of such earnings. In the event any earnings of non-U.S. subsidiaries are repatriated, the Company will provide U.S. income taxes upon repatriation of such earnings, which will be offset by applicable foreign tax credits, subject to certain limitations.

The Company prescribes a recognition threshold and measurement attribute for an uncertain tax position taken or expected to be taken in a tax return.

The following is a roll-forward of the Company’s unrecognized tax benefits:

Unrecognized tax benefits - January 2, 2010	$	160
Increases from positions taken during prior periods		47
Lapse of statute of limitations		(38	)
Unrecognized tax benefits - January 1, 2011	$	169
Increases from positions taken during prior periods		440
Lapse of statute of limitations		—
Unrecognized tax benefits - December 31, 2011	$	609
Increases from positions taken during prior periods		710
Settled positions		(124	)
Lapse of statute of limitations		—
Unrecognized tax benefits - December 29, 2012	$	1,195

At December 29, 2012, the Company had an unrecognized tax benefit of $1,195 including accrued interest. If recognized, the unrecognized tax benefit would have a favorable effect on the effective tax rate in future periods. The Company recognizes interest and penalties related to income tax matters in income tax expense. Interest related to the unrecognized tax benefit has been recognized and included in income tax expense. Interest accrued as of December 29, 2012, is not considered material to the Company’s Consolidated Financial Statements.

The Company files U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The Company is no longer subject to income tax examinations by tax authorities for years prior to 2004 for the majority of tax jurisdictions.

The Company’s federal returns are currently under examination by the Internal Revenue Service (IRS) in the United States for the periods 2004 through 2009. To date, there have not been any significant proposed adjustments that have not been accounted for in the Company’s financial statements.

Audit outcomes and the timing of audit settlements are subject to significant uncertainty. It is reasonably possible that within the next twelve months the Company will resolve some or all of the matters presently under consideration for 2004 through 2009 with the IRS and that there could be significant increases or decreases to unrecognized tax benefits.