Income Taxes

12 Months Ended

Dec. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income before provision for income taxes are as follows (in thousands):

	Year Ended		Year Ended		Year Ended
	December 30, 2023 (52 weeks)		December 31, 2022 (52 weeks)		January 1, 2022 (52 weeks)
Income before provision for income taxes:
U.S.	$	41,238	$	45,387	$	43,511
Foreign	11,050		13,413		10,764
Total	$	52,288	$	58,800	$	54,275

The provision (benefit) for income taxes consists of the following (in thousands):

	Year Ended		Year Ended		Year Ended
	December 30, 2023 (52 weeks)		December 31, 2022 (52 weeks)		January 1, 2022 (52 weeks)
Currently payable:
Federal	$	11,544	$	8,805	$	7,072
Foreign	2,796		2,956		2,517
State	4,101		3,231		2,561
Total current expense	18,441		14,992		12,150
Deferred:
Federal	(2,963)		(21)		(92)
Foreign	(1,041)		114		230
State	(630)		96		308
Total deferred expense (benefit)	(4,634)		189		446
Total tax expense	$	13,807	$	15,181	$	12,596

A reconciliation of CRA's tax rates with the federal statutory rate is as follows:

	Fiscal Year		Fiscal Year		Fiscal Year
	2023		2022		2021
Federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal income tax benefit	5.0		5.2		5.3
Share-based compensation	(1.1)		(2.4)		(5.0)
Meals & Entertainment Expense	0.9		0.3		0.1
Executive Compensation	1.7		1.6		1.3
Valuation Allowance	(1.5)		0.7		0.6
Other	0.4		(0.6)		(0.1)
Annual effective tax rate	26.4	%	25.8	%	23.2	%

The components of CRA's deferred tax assets and liabilities are as follows (in thousands):

	December 30, 2023		December 31, 2022
Deferred tax assets:
Accrued compensation and related expense	$	18,211	$	15,432
Allowance for doubtful accounts	2,100		1,263
Net operating loss carryforwards	883		560
Lease liabilities	27,791		31,552
Foreign exchange and other	19		73
Total gross deferred tax assets	49,004		48,880
Less: valuation allowance	(6)		(749)
Total deferred tax assets, net of valuation allowance	48,998		48,131
Deferred tax liabilities:
Goodwill and other intangible asset amortization	5,599		4,749
Right-of-Use assets	22,472		25,376
Property and equipment	6,761		8,397
Prepaids and other	1,343		1,399
Total deferred tax liabilities	36,175		39,921
Net deferred tax assets	$	12,823	$	8,210

At December 30, 2023, CRA had U.S. local and foreign net operating losses of $2.6 million, an increase of $0.3 million from the prior fiscal year-end, with lives ranging from 20 years to indefinite. The change in the total valuation allowance for the current fiscal year was a decrease of approximately $0.7 million. The change in assessment was prompted by the enactment of new legislation in a foreign jurisdiction, and as a result, the foreign entity is currently profitable and is expected to maintain profitability in future years. The release of the valuation allowance was comprised primarily of the foreign net operating loss carryforwards previously noted which are forecasted to be utilized over approximately a forty-year period.

The aggregate changes in the balances of gross unrecognized tax benefits were as follows (in thousands):

	Fiscal Year		Fiscal Year
	2023		2022
Balance at beginning of period	$	35	$	41
Reductions as a result of a lapse of the applicable statutes of limitations	(35)		(6)
Balance at end of the period	$	—	$	35

CRA files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. CRA adjusts its unrecognizable tax benefits and the associated interest in light of changing facts and circumstances. A number of years may

elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, CRA believes that its unrecognized tax benefits reflect the most likely outcome.

The number of years with open tax audits varies depending on the tax jurisdiction. CRA's major taxing jurisdiction is the United States where CRA is no longer subject to U.S. federal examinations by the Internal Revenue Service for years before fiscal 2020. Within the significant states where CRA is subject to income tax, CRA is no longer subject to examinations by state taxing authorities before fiscal 2019. CRA's United Kingdom ("U.K.") subsidiary's corporate tax returns are no longer subject to examination by His Majesty's Revenue and Customs for years before fiscal 2022.

In fiscal 2020, as a result of both a qualitative and quantitative analysis, certain amounts of previously taxed and untaxed post fiscal 2018 U.K. earnings were no longer considered permanently reinvested. Deferred taxes that are a consequence of foreign exchange translation resulting from earnings that are no longer considered permanently reinvested are recorded as a component of foreign currency translation adjustments on the consolidated statements of comprehensive income. In fiscal 2023, CRA's U.S. parent entity received approximately $10.2 million in cash dividends from CRA's U.K. subsidiary. These dividends were distributed out of a mix of both previously taxed and untaxed earnings, the latter of which qualified for a full dividends-received-deduction. The foreign exchange translation on the distribution was approximately $0.1 million and the tax impact, which was immaterial, was recorded as a component of other comprehensive income.

Deferred income taxes or foreign withholding taxes, estimated to be $0.5 million, have not been recorded for other jurisdictions as those earnings are considered to be permanently reinvested.