Income Taxes

12 Months Ended

Dec. 25, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The provisions for income taxes were as follows:

	Fiscal Year Ended
	December 25, 2019			December 26, 2018			December 27, 2017
	(In thousands)
Current:
Federal	$	12,421		$	(632	)	$	3,688
State and local	5,156			1,833			2,071
Foreign	1,142			1,042			961
Deferred:
Federal	9,944			5,432			10,075
State and local	6,061			761			196
(Decrease) increase of valuation allowance	(2,935		)	121			216
Total provision for income taxes	$	31,789		$	8,557		$	17,207

The reconciliation of income taxes at the U.S. federal statutory tax rate to our effective tax rate was as follows: 

	December 25, 2019		December 26, 2018		December 27, 2017
Statutory provision rate	21	%	21	%	35	%
State and local taxes, net of federal income tax benefit	8		6		5
Reduction in state valuation allowance	(2	)	—		—
Wage addback on income tax credits earned	—		—		2
General business credits generated	(2	)	(5	)	(5	)
Foreign tax credits generated	(1	)	(2	)	(2	)
Share-based compensation	(3	)	(3	)	(3	)
Impact of tax reform	—		—		(3	)
Other	—		(1	)	1
Effective tax rate	21	%	16	%	30	%

On December 22, 2017, The Tax Cut and Jobs Act of 2017 (the “Tax Act”) was signed into law. The Tax Act reduces the U.S. statutory tax rate from 35% to 21% for years after 2017. Accordingly, we revalued our deferred taxes as of December 27, 2017 to reflect the reduced rate that will apply in future periods when these deferred taxes are realized. The net tax benefit recognized in 2017 related to the Tax Act was $1.6 million.

For 2019, there was no significant difference between our effective tax rate and the statutory tax rate of 21%. The impact of state taxes on the statutory rate was partially offset by the generation of employment and foreign tax credits. In addition, the 2019 rate benefited $2.0 million related to share-based compensation and $2.0 million related to the completion of an Internal Revenue Service federal income audit of the 2016 tax year. The 2018 rate was primarily impacted by the Tax Act statutory tax rate reduction, state taxes and the generation of employment and foreign tax credits. In addition, the 2018 rate benefited $1.4 million from items related to share-based compensation. For the 2017 period, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state taxes and the generation of employment and foreign tax credits. The 2017 rate also benefited $1.7 million from share-based compensation and $1.6 million from the revaluing of deferred tax assets and liabilities required under the Tax Act.

The following table represents the approximate tax effect of each significant type of temporary difference that resulted in deferred income tax assets or liabilities.

	December 25, 2019			December 26, 2018
	(In thousands)
Deferred tax assets:
Self-insurance accruals	$	4,202		$	4,647
Finance lease liabilities	1,263			2,045
Operating lease liabilities	43,497			—
Accrued exit cost	48			445
Interest rate swaps	11,491			1,157
Pension, other retirement and compensation plans	10,549			10,568
Deferred income	4,688			5,099
Other accruals	—			633
Alternative minimum tax credit carryforwards	—			928
General business and foreign tax credit carryforwards - state and federal	2,945			11,061
Net operating loss carryforwards - state	9,621			13,899
Total deferred tax assets before valuation allowance	88,304			50,482
Less: valuation allowance	(10,264		)	(13,199		)
Total deferred tax assets	78,040			37,283
Deferred tax liabilities:
Intangible assets	(14,858		)	(14,631		)
Deferred finance costs	(211		)	(286		)
Operating lease right-of-use assets	(40,751		)	—
Fixed assets	(6,711		)	(5,033		)
Other accruals	(791		)	—
Total deferred tax liabilities	(63,322		)	(19,950		)
Net deferred tax asset	$	14,718		$	17,333

The Company’s state net operating loss tax asset of approximately $9.6 million includes $8.3 million related to South Carolina.

The $2.9 million change in the valuation allowance primarily relates to the expiration of $3.6 million of South Carolina net operating loss carryforwards, partially offset by additional valuation allowances of $0.7 million on state enterprise zone credits and foreign tax credits that will never be utilized.

Of the $10.3 million of the valuation allowance, $8.1 million related to South Carolina net operating loss carryforwards, $1.1 million related to state enterprise zone credits and $0.7 million related to foreign tax credit carryforwards, all of which will never be utilized.

It is more likely than not that we will be able to utilize all of our existing temporary differences and most of our remaining state tax net operating losses and state credit tax carryforwards prior to their expiration.

The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits:

	December 25, 2019			December 26, 2018
	(In thousands)
Balance, beginning of year	$	2,940		$	1,469
Increase related to current-year tax positions	—			941
(Decrease) increase related to prior-year tax positions	(1,893		)	530
Balance, end of year	$	1,047		$	2,940

There was no interest expense associated with unrecognized tax benefits for the years ended December 25, 2019 and December 26, 2018, respectively.

We file income tax returns in the U.S. federal jurisdictions and various state jurisdictions. 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 before 2016. We completed our federal audit by the Internal Revenue Service for tax year 2016 during 2019. We remain subject to examination for U.S. federal taxes for 2017, 2018 and 2019 and in the following major state jurisdictions: California (2015-2019), Florida (2016-2019) and Texas (2015-2019).