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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Taxes |
11. | INCOME TAXES
Income tax provision (benefit) for the years ended December 31, 2013, 2012 and 2011 consists of the following (in thousands):
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Current income tax provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 1,745 |  |  | $ | 303 |  |  | $ | (2,738 | )
State |  |  | 404 |  |  |  | 88 |  |  |  | (32 | )
|  |  | 2,149 |  |  |  | 391 |  |  |  | (2,770 | )
Deferred income tax provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (11,182 | ) |  |  | 510 |  |  |  | 164 |
State |  |  | (1,516 | ) |  |  | 108 |  |  |  | 1 |
|  |  | (12,698 | ) |  |  | 618 |  |  |  | 165 |
Total income tax provision (benefit) |  | $ | (10,549 | ) |  | $ | 1,009 |  |  | $ | (2,605 | )
The income tax provision (benefit) differs from the amount of income tax determined by applying the U.S. federal statutory rate to income before taxes as a result of the following (in thousands):
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
U.S. federal statutory taxes |  | $ | 8,417 |  |  | $ | 1,305 |  |  | $ | (4,826 | )
State and local taxes, net of U.S. federal benefit |  |  | 1,061 |  |  |  | (418 | ) |  |  | (650 | )
Permanent items |  |  | 225 |  |  |  | 198 |  |  |  | 96 |
Federal credits |  |  | (566 | ) |  |  | (54 | ) |  |  | (59 | )
Other |  |  | 244 |  |  |  | 46 |  |  |  | (275 | )
Increase (decrease) in valuation allowance |  |  | (19,930 | ) |  |  | (68 | ) |  |  | 3,109 |
Total income tax provision (benefit) |  | $ | (10,549 | ) |  | $ | 1,009 |  |  | $ | (2,605 | )
Deferred tax assets and liabilities as of December 31, 2013 and 2012 consist of the following (in thousands):
|  | As of December 31, |
|  | 2013 |  |  | 2012 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 483 |  |  | $ | 9,962 |
Warranty reserve |  |  | 16,085 |  |  |  | 11,406 |
Stock-based compensation |  |  | 2,383 |  |  |  | 2,654 |
Accruals not currently deductible and other |  |  | 6,210 |  |  |  | 8,193 |
Inventories |  |  | 3,843 |  |  |  | 5,008 |
State tax credit carryforwards |  |  | 3,714 |  |  |  | 4,105 |
Gross deferred tax assets, before valuation allowance |  |  | 32,718 |  |  |  | 41,328 |
Valuation allowance |  |  | (4,201 | ) |  |  | (24,131 | )
Gross deferred tax assets, after valuation allowance |  |  | 28,517 |  |  |  | 17,197 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and other |  |  | (19,380 | ) |  |  | (20,758 | )
Gross deferred tax liabilities |  |  | (19,380 | ) |  |  | (20,758 | )
Net deferred tax asset (liability) |  | $ | 9,137 |  |  | $ | (3,561 | )
The Company accounts for income taxes in accordance with ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted rates expected to be in effect during the year in which the differences reverse. In accordance with ASC 740, the Company assesses the likelihood that its deferred tax assets will be realized. Deferred tax assets are reduced by a valuation allowance when, after considering all available positive and negative evidence, it is determined that it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. As of December 31, 2012, the Company had a full valuation allowance recorded against its deferred tax assets. The Company’s assessment gave significant weight to the negative evidence of its cumulative loss history in the three years ended December 31, 2012. As of December 31, 2013, the Company determined that it more likely than not will realize most of its deferred tax assets and, as a result, reversed a significant portion of its valuation allowance. The analysis performed to assess the need for a valuation allowance included an evaluation of the four possible sources of taxable income as identified in ASC 740, including the consideration of the positive evidence of its cumulative income history in the three years ended December 31, 2013. Based on this analysis, as well as due to the realization of certain deferred tax assets during 2013, the Company recorded a $19.9 million reduction of its valuation allowance during the year ended December 31, 2013, $10.9 million of which was a direct result of the Company’s decision to exit a full valuation allowance. As of December 31, 2013, the remaining valuation allowance is $4.2 million, primarily related to certain state tax credits the Company estimates will expire before they are realized. The Company will analyze its position in subsequent reporting periods, considering all available positive and negative evidence, in determining the expected realization of its deferred tax assets. The Company recognizes excess tax benefits for stock-based awards as an increase to additional paid-in capital only when realized. The Company realized $1.5 million of excess tax benefits during 2013 and, accordingly, recorded an increase to additional paid-in capital. Deferred tax assets are not recognized for net operating loss carryfowards resulting from excess tax benefits related to exercised stock-based awards. As of December 31, 2013, deferred tax assets do not include $10.3 million of excess tax benefits that are a component of the Company’s net operating loss carryforwards. Accordingly, additional paid-in capital will increase up to an additional $10.3 million if and when such excess tax benefits are realized. The Company has federal net operating losses of $18.2 million at December 31, 2013 that begin to expire in 2028. As of December 31, 2013, the Company has effectively eliminated all unrecognized tax benefits. The following table illustrates changes to recorded unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011 (in thousands):
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Unrecognized tax benefits balance at January 1 |  | $ | — |  |  | $ | 60 |  |  | $ | 3,126 |
Gross increases related to prior year tax positions |  |  | — |  |  |  | — |  |  |  | 1 |
Gross decreases related to prior year tax positions |  |  | — |  |  |  | (36 | ) |  |  | (2,760 | )
Settlements |  |  | — |  |  |  | (22 | ) |  |  | (245 | )
Lapse of statute of limitations |  |  | — |  |  |  | (2 | ) |  |  | (62 | )
Unrecognized tax benefits balance at December 31 |  | $ | — |  |  | $ | — |  |  | $ | 60 |
The Company recognizes interest and penalties related to tax matters as a component of “Selling, general and administrative expenses” in the accompanying consolidated statements of comprehensive income. As of December 31, 2013 and December 31, 2012, the Company had no material amounts accrued for interest or penalties related to uncertain tax positions. The Company operates in multiple tax jurisdictions and, in the normal course of business, its tax returns are subject to examination by various taxing authorities. Such examinations may result in future assessments by these taxing authorities and the Company has accrued a liability when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with ASC 740. As of September 30, 2013, federal tax years 2010 through 2013 remain subject to examination, while tax returns in certain state tax jurisdictions for years 2008 through 2013 remain subject to examination. The Company has been notified by the state of Michigan that returns filed for tax years 2008 through 2011 will be examined during 2014. The Company believes that adequate provisions have been made for Michigan and all tax returns subject to examination. In September 2013, the Internal Revenue Service issued Treasury Decision 9636, which enacted final tax regulations regarding the capitalization and expensing of amounts paid to acquire, produce, or improve tangible property. The regulations also include guidance regarding the retirement of depreciable property. The regulations are required to be effective in taxable years beginning on or after January 1, 2014. The Company is currently assessing the impact of the final regulations on its financial statements.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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