Income Taxes

12 Months Ended

Dec. 29, 2012

Income Taxes [Abstract]

Income Taxes

10. Income Taxes

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

(in thousands)	2012			2011			2010
Current:
Federal	$	37,192		$	30,952		$	25,943
State		2,895			2,377			2,197
		40,087			33,329			28,140
Deferred:
Federal		(2,214	)		(1,927	)		393
State		(170	)		(70	)		34
		(2,384	)		(1,997	)		427
Total	$	37,703		$	31,332		$	28,567

Also, the income tax benefit related to our discontinued operations was $1.4 million, $0.1 million and

$0.1 million for the years ended December 29, 2012, December 31, 2011 and December 25, 2010, respectively.

The following is a reconciliation of income taxes at the statutory tax rate to the Company’s effective tax rate:

	2012			2011			2010
Federal taxes at statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of Federal tax benefit		1.7			1.7			1.9
Proceeds from 2011 receipt of officer’s life insurance		—			(0.8	)		—
Stock-based compensation		0.1			0.1			0.1
Other		(0.6	)		(0.2	)		0.3
Effective tax rate		36.2	%		35.8	%		37.3	%

At December 29, 2012, we have $1.8 million of unrecognized tax benefits, $1.1 million of which would affect our effective tax rate if recognized.

The following table summarizes the change in uncertain tax benefit reserves for the three years ended December 29, 2012:

(in thousands)	2012			2011			2010
Balance at beginning of year	$	2,161		$	2,532		$	2,175
Reductions due to lapses in statutes of limitations		(44	)		(65	)		(8	)
Reductions due to payments for tax positions settled		(379	)		(702	)		—
Reductions due to reversals of prior year positions		(651	)		(210	)		—
Additions based on tax positions taken during the current period		698			606			365
Balance at end of year	$	1,785		$	2,161		$	2,532

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 29, 2012, we have approximately $0.2 million of accrued interest related to uncertain tax positions.

Deferred income taxes result from timing differences in the recognition of revenue and expense for tax and financial statement purposes. The sources of temporary differences are as follows:

(in thousands)	December 29, 2012		December 31, 2011
Assets:
Inventories	$	6,779	$	6,704
Accounts receivable		10,847		8,902
Accrued expenses		2,079		2,288
Other		1,764		1,801
Gross deferred tax assets		21,469		19,695
Liabilities:
Depreciation		3,367		2,129
Goodwill		9,231		9,149
Other		991		1,497
Gross deferred tax liabilities		13,589		12,775
Net deferred tax assets before valuation allowance		7,880		6,920
Valuation allowance		—		(1,424	)
Net deferred tax assets	$	7,880	$	5,496

In fiscal 2011, we recorded a valuation allowance totaling $0.8 million against certain foreign tax loss carryforwards. In fiscal 2012, we wrote-off a $1.4 million deferred tax asset associated with certain foreign tax loss carryforwards which were fully reserved.

Based on our history of taxable income and our projection of future earnings, we believe that it is more likely than not that sufficient taxable income will be generated in the foreseeable future to realize the remaining net deferred tax assets.

We file income tax returns in the United States and Sweden. In the United States, all years before 2008 are closed for federal tax purposes. In regards to state tax, we are currently under examination by two state tax authorities and tax years after 2009 are open to examination. In Sweden, all years prior to 2008 are closed. It is reasonably possible that audit settlements, the conclusion of current examinations or the expiration of the statute of limitations could impact the Company’s unrecognized tax benefits.