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Income Taxes (Tables) | 12 Months Ended
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Jan. 02, 2018
Income Taxes |
Schedule of provision for income taxes | The provision for income taxes consisted of the following (in thousands):
|  | Fiscal Year |
|  | 2017 (1) |  | 2016 |  | 2015 |
Income before income taxes |  | $ | 146,466 |  | $ | 191,768 |  | $ | 159,352 |
Income tax provision/(benefit): |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |
Federal |  | $ | 7,148 |  | $ | 42,665 |  | $ | 32,765 |
State |  | 7,106 |  | 10,614 |  | 8,880 |
Total current |  | 14,254 |  | 53,279 |  | 41,645 |
Deferred: |  |  |  |  |  |  |
Federal |  | (24,570 | ) | (564 | ) | 2,659 |
State |  | (610 | ) | (441 | ) | (1,475 | )
Total deferred |  | (25,180 | ) | (1,005 | ) | 1,184 |
Total provision/(benefit) |  | $ | (10,926 | ) | $ | 52,274 |  | $ | 42,829 |
| (1) |  | The Tax Cuts and Jobs Act (“Tax Act”), which was enacted on December 22, 2017, made significant changes to how corporations are taxed in the U.S., the most prominent of which affecting us was to lower the U.S. corporate tax rate from 35% to 21%. In addition to the benefit of a lower rate in future years, the enactment of the Tax Act caused us to revalue our deferred tax assets and liabilities to reflect the new rate, resulting in a benefit to our fiscal 2017 income tax provision of $38.5 million.
Schedule of reconciliation between U.S. federal statutory rate and effective tax rate |
|  | Fiscal Year |
|  | 2017 |  | 2016 |  | 2015 |
U.S. federal statutory rate |  | 35.0 | % | 35.0 | % | 35.0 | %
State and district income taxes, net of federal benefit |  | 3.3 |  | 3.5 |  | 3.0 |
Credit for FICA taxes paid on tips |  | (9.4 | ) | (7.0 | ) | (8.0 | )
Other credits and incentives |  | (1.9 | ) | (1.3 | ) | (1.0 | )
Manufacturing deduction |  | (2.3 | ) | (2.5 | ) | (2.8 | )
Deferred compensation |  | (1.5 | ) | (0.5 | ) | 0.3 |
Equity compensation (1) |  | (4.5 | ) | — |  | — |
Impact of statutory rate change on deferred taxes |  | (26.3 | ) | — |  | — |
Other |  | 0.1 |  | 0.1 |  | 0.4 |
Effective tax rate |  | (7.5 | )% | 27.3 | % | 26.9 | %
| (1) |  | This item impacts our effective tax rate for the first time in fiscal 2017 due to our adoption of new accounting guidance that requires the tax impact of exercised stock options and vested restricted stock to be recorded in the income tax provision instead of additional paid-in capital. See “Recent Accounting Pronouncements” in Note 1 of Notes to Consolidated Financial Statements in Part IV, Item 15 of this report for further discussion of this accounting change.
Schedule of deferred tax assets and liabilities | Following are the temporary differences that created our deferred tax assets and liabilities (in thousands):
|  | January 2, 2018 |  | January 3, 2017 |
Deferred tax assets: |  |  |  |  |
Staff member benefits |  | $ | 22,626 |  | $ | 32,258 |
Insurance reserves |  | 14,027 |  | 20,932 |
Accrued rent |  | 12,523 |  | 20,583 |
Deferred income |  | 11,607 |  | 14,409 |
Stock-based compensation |  | 8,710 |  | 15,384 |
Tax credit carryforwards |  | 2,308 |  | 2,247 |
Other |  | 738 |  | 957 |
Subtotal |  | 72,539 |  | 106,770 |
Less: Valuation allowance |  | (455 | ) | (457 | )
Total |  | $ | 72,084 |  | $ | 106,313 |
Deferred tax liabilities: |  |  |  |  |
Property and equipment |  | $ | (111,324 | ) | $ | (166,183 | )
Prepaid expenses |  | (9,120 | ) | (12,192 | )
Inventory |  | (6,724 | ) | (10,339 | )
Other |  | (2,132 | ) | — |
Total |  | $ | (129,300 | ) | $ | (188,714 | )
Net deferred tax liability |  | $ | (57,216 | ) | $ | (82,401 | )
Schedule of reconciliation of our uncertain tax positions | A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands):
|  | Fiscal Year |
|  | 2017 |  | 2016 |  | 2015 |
Balance at beginning of year |  | $ | 829 |  | $ | 1,067 |  | $ | 875 |
Additions related to current period tax positions |  | 168 |  | 139 |  | 192 |
Reductions related to settlements with taxing authorities and lapses of statutes of limitations |  | (154 | ) | (377 | ) | (0 | )
Balance at end of year |  | $ | 843 |  | $ | 829 |  | $ | 1,067 |

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 + Details
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- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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- Definition Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32687-109319 + Details
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- Definition Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15A -URI http://asc.fasb.org/extlink&oid=65882285&loc=SL6600010-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 19 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32840-109319 + Details
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