Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Reconciliations between the effective tax rate on income from continuing operations before income taxes and the federal statutory rate are presented below.

	December 31, 2022			December 26, 2021			December 27, 2020
(In thousands)	Amount		% of Pre-tax	Amount		% of Pre-tax	Amount		% of Pre-tax
Tax at federal statutory rate	$	49,560	21.0	$	61,005	21.0	$	24,241	21.0
State and local taxes, net	16,855		7.1	16,378		5.6	3,873		3.4
Increase/(decrease) in uncertain tax positions	(220)		(0.1)	2,782		1.0	(2,509)		(2.2)
(Gain) on company-owned life insurance	857		0.4	(712)		(0.2)	(635)		(0.6)
Nondeductible expense	780		0.3	593		0.2	800		0.7
Nondeductible executive compensation	3,985		1.7	4,140		1.4	1,271		1.1
Stock-based awards benefit	(1,119)		(0.5)	(5,461)		(1.9)	(7,251)		(6.3)
Deduction for foreign-derived intangible income	(3,166)		(1.3)	(2,972)		(1.0)	(686)		(0.6)
Research and experimentation credit	(6,699)		(2.8)	(5,571)		(1.9)	(3,892)		(3.4)
Other, net	1,261		0.5	348		0.1	(617)		(0.5)
Income tax expense	$	62,094	26.3	$	70,530	24.3	$	14,595	12.6

The components of income tax expense as shown in our Consolidated Statements of Operations were as follows:

(In thousands)	December 31, 2022		December 26, 2021		December 27, 2020
Current tax expense/(benefit)
Federal	$	75,495	$	55,110	$	21,414
Foreign	1,897		1,042		905
State and local	30,855		20,736		7,453
Total current tax expense	108,247		76,888		29,772
Deferred tax expense/(benefit)
Federal	(36,344)		(5,651)		(9,249)
State and local	(9,809)		(707)		(5,928)
Total deferred tax expense	(46,153)		(6,358)		(15,177)
Income tax expense	$	62,094	$	70,530	$	14,595

The components of the net deferred tax assets and liabilities recognized in our Consolidated Balance Sheets were as follows:

(In thousands)	December 31, 2022		December 26, 2021
Deferred tax assets
Retirement, postemployment and deferred compensation plans	$	67,797	$	86,886
Accruals for other employee benefits, compensation, insurance and other	31,335		34,999
Net operating losses(1)	52,522		1,018
Operating lease liabilities	18,403		19,663
Capitalized research and development costs (2)	55,370		—
Other	32,974		31,379
Gross deferred tax assets	$	258,401	$	173,945
Valuation allowance	(4,258)		(261)
Net deferred tax assets	$	254,143	$	173,684
Deferred tax liabilities
Property, plant and equipment	$	44,698	$	38,855
Intangible assets	88,115		7,738
Operating lease right-of-use assets	15,453		16,960
Other	9,514		14,331
Gross deferred tax liabilities	$	157,780	$	77,884
Net deferred tax asset	$	96,363	$	95,800

(1) Includes federal tax operating loss carryforwards acquired in connection with The Athletic Media Company acquisition.

(2) As a result of the Tax Cuts and Jobs Act, see Liquidity and Capital Resources section in the Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information.

Federal tax operating loss carryforwards acquired in connection with The Athletic Media Company acquisition totaled $47 million as of December 31, 2022. Such losses have remaining lives of up to 15 years.

State tax operating loss carryforwards totaled $6.9 million as of December 31, 2022, and $0.8 million as of December 26, 2021. Such loss carryforwards expire in accordance with provisions of applicable tax laws and have remaining lives of up to 19 years.

We assess whether a valuation allowance should be established against deferred tax assets based on the consideration of both positive and negative evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. We evaluated our deferred tax assets for recoverability using a consistent approach that considers our three-year historical cumulative income/(loss), including an assessment of the degree to which any such losses were due to items that are unusual in nature (i.e., impairments of nondeductible goodwill and intangible assets).

We had a valuation allowance totaling $4.3 million as of December 31, 2022, and a valuation allowance totaling $0.3 million as of December 26, 2021, for deferred tax assets primarily associated with net operating losses of U.S. subsidiaries, as we determined these assets were not realizable on a more-likely-than-not basis.

We had an income tax payable of $7.0 million as of December 31, 2022, compared with an income tax payable of $8.2 million as of December 26, 2021.

Income tax benefits related to the exercise or vesting of equity awards reduced current taxes payable by $6.1 million, $11.5 million and $13.1 million in 2022, 2021 and 2020, respectively.

As of December 31, 2022, and December 26, 2021, Accumulated other comprehensive loss, net of income taxes in our Consolidated Balance Sheets and for the years then ended in our Consolidated Statements of Changes in Stockholders’ Equity was net of deferred tax assets of approximately $139 million and $150 million, respectively.

A reconciliation of unrecognized tax benefits is as follows:

(In thousands)	December 31, 2022		December 26, 2021		December 27, 2020
Balance at beginning of year	$	5,891	$	6,737	$	10,309
Gross additions to tax positions taken during the current year	1,504		1,389		1,130
Gross additions to tax positions taken during the prior year	73		2,458		133
Gross reductions to tax positions taken during the prior year	—		(150)		(93)
Reductions from settlements with taxing authorities	(1,116)		(3,534)		(3,814)
Reductions from lapse of applicable statutes of limitations	(824)		(1,009)		(928)
Balance at end of year	$	5,528	$	5,891	$	6,737

The total amount of unrecognized tax benefits that would, if recognized, affect the effective income tax rate was approximately $5 million as of both December 31, 2022, and December 26, 2021.

In 2022 and 2021, we recorded a $2.2 million and a $4.8 million income tax benefit, respectively, due to a reduction in the Company’s reserve for uncertain tax positions.

We also recognize accrued interest expense and penalties related to the unrecognized tax benefits within income tax expense or benefit. The total amount of accrued interest and penalties was $1.5 million and $1.4 million as of December 31, 2022, and December 26, 2021, respectively. The total amount of accrued interest and penalties was $0.1 million in 2022, a net benefit of less than $0.1 million in 2021 and a net benefit of $0.7 million in 2020.

With few exceptions, we are no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years prior to 2013. Management believes that our accrual for tax liabilities is adequate for all open audit years. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.

It is reasonably possible that certain income tax examinations may be concluded, or statutes of limitation may lapse, during the next 12 months, which could result in a decrease in unrecognized tax benefits of $3.0 million that would, if recognized, impact the effective tax rate.