
	Year Ended
	December 27, 2020		December 29, 2019		December 30, 2018
Federal income taxes:
Current	$	—	$	(0.2)	$	(0.4)
Deferred	(68.2)		(3.9)		(1.8)
Total Federal	(68.2)		(4.1)		(2.2)
State and local income taxes:
Current	0.5		1.0		0.4
Deferred	(9.4)		(0.9)		1.4
Total State and local	(8.9)		0.1		1.8
Foreign income taxes:
Current	4.2		9.0		4.8
Deferred	(0.6)		(0.2)		0.2
Total Foreign	3.6		8.8		5.0
Total	$	(73.5)	$	4.8	$	4.6

A reconciliation of the total income tax provision (benefit) to the amount computed by applying the statutory federal income tax rate of 21% to the income from continuing operations before income taxes for the years ended December 27, 2020, December 29, 2019 and December 30, 2018 is as follows (in millions):


	Year Ended
	December 27, 2020		December 29, 2019		December 30, 2018
Income tax at federal statutory rate	$	1.4	$	3.3	$	1.8
State taxes, net of federal tax benefit and valuation allowance	0.6		0.6		0.9
Difference in tax rates between U.S. and foreign	1.3		1.9		0.7
Increase (decrease) in valuation allowance	(80.1)		(3.3)		4.7
Nondeductible expense	1.0		1.0		0.6
Increase in reserve for uncertain tax positions	3.0		7.7		4.0

Changes to indefinite life items and separate state deferred taxes	(0.1)		0.4		(0.7)
One-time transition tax on previously undistributed foreign earnings	—		—		2.2

Decrease in deferred taxes related to disposition	—		—		(9.6)

Release of valuation allowance due to acquisitions	(1.3)		(5.2)		—
Stock-based compensation	0.7		(1.6)		—
Total	$	(73.5)	$	4.8	$	4.6

Effective January 1, 2018, the Tax Cuts and Jobs Act (“TCJA”) required the acceleration of certain types of revenue for tax purposes. The new rules prohibit the Company from deferring revenue on unbilled accounts receivable later than when the amounts are recognized as revenue for book purposes. This change impacted several accounting methods previously used by the Company and resulted in an acceleration of taxability of such revenue as compared with prior U.S. tax laws. The additional revenue will be recognized over four years beginning in 2018. Additionally, interest deductions of the Company will be limited to 50% of tax adjusted EBITDA in 2020 and 30% in future years.

Additionally, effective January 1, 2018, the TCJA imposes a U.S. tax on global intangible low taxed income (“GILTI”) that is earned by certain foreign affiliates owned by a U.S. shareholder each year. The computation of GILTI is generally intended to impose tax on the earnings of a foreign corporation that are deemed to exceed a certain threshold return relative to the underlying business investment. The Company has made a policy election to treat future taxes related to GILTI as a current period expense in the reporting period in which the tax is incurred.


	December 27, 2020		December 29, 2019
Deferred tax assets:
Stock-based compensation	$	7.9	$	5.3
Payroll related accruals	11.7		9.2
Lease accruals	21.7		22.1
Net operating loss carryforwards	66.0		75.1
Tax credit carryforwards	11.7		11.2
Other	18.5		20.2
	137.5		143.1
Valuation allowance	(7.4)		(88.6)
Total deferred tax assets, net of valuation allowance	130.1		54.5
Deferred tax liabilities:
Unearned revenue	(10.7)		(19.0)
Operating lease right-of-use assets	(19.7)		(20.2)
Other intangibles	(24.6)		(21.0)
Property and equipment, principally due to differences in depreciation	(7.0)		(2.0)
Other	(1.5)		(1.3)
Total deferred tax liabilities	(63.5)		(63.5)
Net deferred tax asset (liability)	$	66.6	$	(9.0)

The Company maintained a full valuation allowance on its U.S. deferred tax assets as of the third quarter of 2020. During the fourth quarter of 2020, the Company evaluated all available evidence, both positive and negative, to determine whether based on the weight of that evidence, a valuation allowance for deferred tax assets was still needed. Evidence evaluated by the Company included but was not limited to, its three-year cumulative income position, the results and trend of pretax book income from core operations and its forecast of taxable income. As a result, the Company determined that the majority of its U.S. deferred tax assets were more likely than not to be realized and reversed a significant portion of the valuation allowance against those deferred tax assets accordingly. The remaining valuation allowance on the Company’s U.S. deferred tax assets as of December 27, 2020 relate primarily to state net operating loss and capital loss carryforwards the Company estimates it may not be able to utilize in future periods. During fiscal 2020, the Company recorded a net decrease in its valuation allowance of $81.2 million.

At December 27, 2020, the Company had federal tax loss carryforwards of $271.0 million and various state tax loss carryforwards of $245.8 million. The federal tax loss carryforwards will begin to expire in 2027 and state tax loss carryforwards will begin to expire in 2021 in certain states. Additionally, the state capital loss carryforward generated in 2018 will begin to expire in 2024. At December 27, 2020, the Company had federal tax credit carryforwards of $11.1 million and various state tax credit carryforwards of $0.6 million. The federal tax credit carryforwards will begin to expire in 2024 and the state tax credit carryforwards do not have an expiration.

Federal and state income tax laws impose restrictions on the utilization of net operating losses (“NOLs”) and tax credit carryforwards in the event that an “ownership change” occurs for tax purposes, as defined by Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”). In general, an ownership change occurs when shareholders owning 5% or more of a “loss corporation” (a corporation entitled to use NOLs or other loss carryovers) have increased their ownership of stock in such corporation by more than 50 percentage points during any 3-year period. The annual base Section 382 limitation is calculated by multiplying the loss corporation’s value at the time of the ownership change by the greater of the long-term tax-exempt rate determined by the Internal Revenue Service in the month of the ownership change or the two preceding months. This base limitation is subject to adjustments, including an increase for built-in gains recognized in the five year period after the ownership change.

In tax years 2010 and 2011 the Company experienced a Section 382 “ownership change” that will limit the utilization of NOL carryforwards. Additionally, in prior years the Company acquired corporations with NOL carryforwards at the date of acquisition (“Acquired NOLs”). The Acquired NOLs are subject to separate limitations that may further restrict the use of

Acquired NOLs. For the year ended December 27, 2020, there was no impact of such Section 382 limitations on the income tax provision since the amount of taxable income did not exceed the annual limitation amount. However, future equity offerings or acquisitions that have equity as a component of the purchase price could also cause an “ownership change.” If and when any other “ownership change” occurs, utilization of the NOLs or other tax attributes may be further limited.

As of December 31, 2017, all accumulated undistributed earnings of our foreign subsidiaries were subject to the one-time transition tax on foreign earnings required by the 2017 Tax Cuts and Jobs Act. It is the Company’s intention to permanently reinvest undistributed earnings of its foreign subsidiaries. As such, the Company has not provided deferred U.S. income taxes or foreign withholding taxes of approximately $11.0 million on temporary differences relating to the outside basis in its investment in foreign subsidiaries. As of December 27, 2020, the Company has $29.2 million of cash and cash equivalents available for distribution.

The Company is subject to taxation in the U.S., various state tax jurisdictions and various foreign tax jurisdictions. The Company’s tax years for 2000 and later are subject to examination by the U.S. and state tax authorities due to the existence of NOL carryforwards. Generally, the Company’s tax years for 2015 and later are subject to examination by various foreign tax authorities, as well.


Balance as of December 31, 2017	$	15.6
Increases related to prior periods	0.5
Increases related to current year tax positions	4.0
Expiration of applicable statutes of limitations	(0.4)
Decreases related to prior year tax positions	(0.3)
Decreases related to disposition	(1.7)

Balance as of December 30, 2018	17.7
Increases related to prior periods	0.2
Increases related to current year tax positions	6.3
Expiration of applicable statutes of limitations	(0.1)
Decreases related to settlement with tax authorities	(0.1)


Balance as of December 29, 2019	24.0
Increases related to prior periods	0.2
Increases related to current year tax positions	1.5
Expiration of applicable statutes of limitations	(0.3)
Decreases related to settlement with tax authorities	—

Balance as of December 27, 2020	$	25.4

Included in the balance of unrecognized tax benefits at December 27, 2020, are $25.4 million of tax benefits that, if recognized, would affect the effective tax rate. Included in this amount is $11.3 million that would become a deferred tax asset if the tax benefit were recognized. As such, this benefit may be impacted by a corresponding valuation allowance depending upon the Company’s assessment of the realizability of the deferred tax asset at the time the benefits are recognized.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. For the years ended December 27, 2020, December 29, 2019 and December 30, 2018, the Company recorded $1.9 million, $1.3 million, and $0.6 million, respectively, in interest or penalty expenses. These amounts are netted by a benefit for interest and penalties related to the reversal of prior positions and the disposition of PSS in 2018 of $0.2 million, $0.1 million, and $1.1 million for the years ended December 27, 2020, December 29, 2019, and December 30, 2018, respectively. As of December 27, 2020, December 29, 2019, and December 30, 2018, the Company had accrued total interest and penalties of $4.5 million, $2.8 million and $1.6 million, respectively.

The Company believes that it is reasonably possible that as much as $0.3 million of the liabilities for uncertain tax positions will expire within 12 months of December 27, 2020 due to the expiration of various applicable statues of limitations.