Income Taxes

12 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income TaxesThe provision for income tax expense (benefit) consists of the following:

	Fiscal Year Ended
	September 30, 2023		September 24, 2022		September 25, 2021
	(in thousands)
Current:
Federal	$	41,375	$	11,391	$	49,941
State	6,229		4,418		6,193
Foreign	997		2,297		645
Total	48,601		18,106		56,779
Deferred:
Federal	(10,339)		27,276		(14,740)
State	(2,547)		1,710		(690)
Foreign	633		(858)		686
Total	(12,253)		28,128		(14,744)
Total	$	36,348	$	46,234	$	42,035

A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows:

	Fiscal Year Ended
	September 30, 2023		September 24, 2022		September 25, 2021
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	1.5		2.5		2.2
Other permanent differences	0.5		0.4		0.1
Adjustment of prior year accruals	(0.2)		0.2		(0.1)
Credits	(0.7)		(0.5)		(0.4)
Stock based compensation	(0.3)		(0.5)		(1.4)
Other	0.6		0.1		0.2
Effective income tax rate	22.4	%	23.2	%	21.6	%

The tax effect of temporary differences and carryforwards which give rise to deferred tax assets and liabilities are as follows:

	September 30, 2023				September 24, 2022
	Deferred Tax Assets		Deferred Tax Liabilities		Deferred Tax Assets		Deferred Tax Liabilities
	(in thousands)
Allowance for doubtful accounts	$	5,338	$	—	$	6,286	$	—
Inventory write-downs	18,230		—		14,413		—
Prepaid expenses			1,602		—		1,787
Nondeductible reserves	10,045		—		8,898		—
State taxes	181		—		—		279
Employee benefits	10,743		—		9,799		—
Depreciation and amortization			192,235		—		194,225
Equity earnings			653		—		564
State net operating loss carryforward	6,158		—		6,415		—
Stock based compensation	8,155		—		7,330		—
State credits	3,055		—		2,979		—
Other	5,389		—		966		—
Valuation allowance	(7,659)		—		(6,734)		—
Total	$	59,635	$	194,490	$	50,352	$	196,855

The Company also has state tax net operating losses of $69.2 million, which expire at various times between 2023 and 2043, and foreign losses of $8.1 million, which do not expire.

The Company has state income tax credits of $3.5 million, which expire at various times beginning in 2024 through 2043. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence including past operating results, future taxable income, and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance against any deferred tax assets. The Company has determined there will be insufficient future separate state and foreign taxable income for the separate parent company and foreign subsidiaries to realize the deferred tax assets. Therefore, valuation allowances of $7.7 million and $6.7 million (net of federal impact) at September 30, 2023 and September 24, 2022, respectively, have been provided to reduce state deferred tax assets to amounts considered recoverable.

The Company classifies uncertain tax positions as non-current income tax liabilities unless expected to be paid within one year. The Company recognizes interest and/or penalties related to income tax matters as a component of pretax income. As of September 30, 2023 and September 24, 2022, accrued interest was less than $0.1 million and no penalties were accrued related to uncertain tax positions.

The following table summarizes the activity related to the Company’s unrecognized tax benefits for fiscal years ended September 30, 2023 and September 24, 2022:  

	(in thousands)
Balance as of September 25, 2021	$	342
Increases related to prior year tax positions	22
Increases related to current year tax positions	110
Decreases related to prior year tax positions	—
Settlements	—
Decreases related to lapse of statute of limitations	(92)
Balance as of September 24, 2022	$	382
Increases related to prior year tax positions	222
Increases related to current year tax positions	100
Decreases related to prior year tax positions	(10)
Settlements	(222)
Decreases related to lapse of statute of limitations	(81)
Balance as of September 30, 2023	$	391

As of September 30, 2023, unrecognized income tax benefits totaled approximately $0.4 million and all of the unrecognized tax benefits would, if recognized, impact the Company’s effective income tax rate.

The Company is principally subject to taxation by the United States and various states within the United States. The Company’s tax filings in major jurisdictions are open to examination by tax authorities by the Internal Revenue Service from fiscal year ended 2020 forward and in various state taxing authorities generally from fiscal year ended 2019 forward.

The Company believes there is a reasonable chance that its unrecognized tax benefits will decrease by less than $0.1 million within the next twelve months.