Income Taxes

12 Months Ended

Oct. 03, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income taxes consist of the following in each fiscal year (in thousands):

	2021		2020		2019
Current:
Federal	$	36,051	$	19,721	$	14,683
State	11,793		7,844		5,242
	47,844		27,565		19,925
Deferred:
Federal	4,440		4,625		3,750
State	3,568		537		350
	8,008		5,162		4,100
Income tax expense from continuing operations	$	55,852	$	32,727	$	24,025
Income tax expense (benefit) from discontinued operations	$	—	$	144	$	(2,863)

A reconciliation of the federal statutory income tax rate to our effective tax rate for continuing operations is as follows:

	2021		2020		2019
Income tax expense at federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	5.1	%	5.3	%	5.3	%
Stock compensation excess tax benefit	(0.5)	%	(0.4)	%	(0.1)	%
Benefit of jobs tax credits, net of valuation allowance	(0.1)	%	(0.5)	%	(0.3)	%
Release of federal tax liability	—	%	—	%	(0.6)	%
Adjustment to state tax provision	0.7	%	—	%	(0.9)	%
Benefit related to COLIs	(1.5)	%	(0.9)	%	(1.0)	%
Termination of interest rate swaps	—	%	—	%	(2.6)	%
Officers’ compensation limitation	0.5	%	2.2	%	1.1	%
Other, net	—	%	0.1	%	(1.1)	%
	25.2	%	26.8	%	20.8	%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at each fiscal year-end are presented below (in thousands):

	2021		2020
Deferred tax assets:
Operating and finance lease liabilities	$	237,509	$	234,926
Accrued defined benefit pension and postretirement benefits	28,837		44,436
Deferred income	12,083		12,921
Impairment	6,957		8,895
Accrued insurance	5,389		6,500
Other reserves and allowances	4,050		2,440
Share-based compensation	4,039		4,143
Accrued incentive compensation	3,455		2,585
Tax loss and tax credit carryforwards	3,129		4,273
Accrued compensation expense	710		672
Other, net	3,424		2,364
Total gross deferred tax assets	309,582		324,155
Valuation allowance	(1,349)		(2,104)
Total net deferred tax assets	308,233		322,051
Deferred tax liabilities:
Operating and finance lease ROU assets	(242,038)		(235,373)
Intangible assets	(11,349)		(11,437)
Property and equipment, principally due to differences in depreciation	(1,036)		(1,781)
Other	(2,293)		(1,138)
Total gross deferred tax liabilities	(256,716)		(249,729)
Net deferred tax assets	$	51,517	$	72,322

Deferred tax assets as of October 3, 2021 include state net operating loss carryforwards of approximately $16.6 million, of which $12.1 million has an indefinite carryforward. The remainder will expire at various times between 2022 and 2038. At October 3, 2021, we recorded a valuation allowance of $1.3 million related to state tax credits, which decreased from the $2.1 million at September 27, 2020 due to the release of the valuation allowance on California Enterprise Zone Credits and state net operating loss carryforwards. We believe it is more likely than not that these credit carryforwards will not be realized and that all other deferred tax assets will be realized through future taxable income or alternative tax strategies.

The major jurisdictions in which the Company files income tax returns include the United States and states in which we operate that impose an income tax. The federal statutes of limitations have not expired for fiscal years 2018 and forward. The statutes of limitations for California and Texas, which constitute the Company’s major state tax jurisdictions, have not expired for fiscal years 2017 and forward.