INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Taxes [Abstract]

Income Taxes

9. INCOME TAXES

Income tax expense (benefit) consist of the following:

	Year Ended December 31,
	2014			2013			2012
Current:
Federal	$	10,039		$	5,080		$	886
State		0			(10	)		(436	)
		10,039			5,070			450
Deferred:
Federal		(425	)		(435	)		(3,837	)
State		177			(1,125	)		(288	)
		(248	)		(1,560	)		(4,125	)
	$	9,791		$	3,510		$	(3,675	)

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

	Year Ended December 31,
	2014			2013			2012
Statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		0.5			(0.6	)		3.8
Executive compensation limitation		0.9			1.6			0.0
Executive stock-based compensation		0.0			0.0			13.5
Food donations		(0.4	)		(2.8	)		8.9
Fixed assets		(1.4	)		0.0			(7.5	)
Changes in reserves		0.1			(6.7	)		4.5
Tax credits		(0.5	)		(1.7	)		(1.4	)
Other		(0.6	)		0.4			(0.1	)
Valuation allowance		0.0			7.1			0.0
		33.6	%		32.3	%		56.7	%

The change in the effective tax rate from 2013 to 2014 was due to changes in executive compensation, decreased levels of food donations and the reduction in tax reserves during 2013 due to the lapse of the statute of limitations which offset a charge to record a valuation allowance in 2013 for charitable contributions carryforwards. The change in the effective tax rate from 2012 to 2013 was due to the changes in executive compensation, decreased levels of food donations and the reduction in tax reserves due to the lapse of the statute of limitations which offset a charge to record a valuation allowance for charitable contributions carryforwards that might not be realized due to the short carryforward period for this temporary difference.

The significant items comprising the Company’s deferred income tax assets and liabilities are as follows:

	December 31,
	2014			2013
Deferred tax asset:
Reserves and accrual	$	920		$	813
Goodwill/Intangible assets		235			316
Net operating loss carryforward		1,639			1,722
Stock-based compensation		1,880			2,002
Charitable contribution carryforward		3,180			3,795
Other		909			889
		8,763			9,537
Valuation allowance		(800	)		(800	)
Deferred tax asset		7,963			8,737
Deferred tax liability:
Property and equipment		(1,451	)		(1,882	)
Net deferred tax asset	$	6,512		$	6,855

At December 31, 2014 and 2013, the Company had net operating loss carryforwards of approximately $29,474 and $29,684, respectively, for state tax purposes. For state tax purposes, there is a limitation on the amount of net operating loss carryforwards that can be utilized in a given year to offset state taxable income. Net operating losses will begin to expire in 2025.

In 2013, the Company recorded a valuation allowance of $800 against its deferred tax asset generated for charitable contributions. The Company recorded the valuation allowance to reduce the deferred tax asset to an amount it expects is more likely than not to be realized due to the short carryforward period for this temporary difference. Based on the projected level of future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the remaining net deferred tax assets. An analysis of the activity of the valuation allowance for the year ended December 31, 2014 is as follows:

Balance at beginning of year	$	800
Additions charged to expense		0
Deductions		0
Balance at end of year	$	800

The total amount of gross unrecognized tax benefits as of December 31, 2014, 2013 and 2012 was $332, $311 and $1,474, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate is approximately $216, $202 and $958 as of December 31, 2014, 2013 and 2012, respectively. The Company records accrued interest and penalties related to unrecognized tax benefits as part of interest expense, net. During 2014, 2013 and 2012, the Company recognized interest income of $28, $71 and $13, respectively, from interest and penalties. The Company’s federal income tax returns for 2011 through 2013 are open and are subject to examination by the Internal Revenue Service. State tax jurisdictions that remain open to examination range from 2011 through 2013. The Company does not believe that that there will be any material changes to unrecognized tax positions over the next 12 months.

A reconciliation of the beginning and ending amounts of the total unrecognized tax benefit is as follows:

	Year Ended December 31,
	2014			2013			2012
Balance at beginning of year	$	311		$	1,474		$	1,919
Increase related to current year tax positions		15			60			67
Increase related to prior year tax positions		138			0			0
Reductions related to settlement of tax matters		0			0			(224	)
Decrease due to lapse of statute of limitations		(132	)		(1,223	)		(288	)
Balance at end of year	$	332		$	311		$	1,474