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Income Taxes | 12 Months Ended
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Dec. 25, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | 17. Income Taxes The following table presents the domestic and foreign components of income before income taxes for 2022, 2021 and 2020 (in thousands):
|  | 2022 |  | 2021 |  | 2020
Domestic income |  | $ | 65,434 |  |  | $ | 115,221 |  |  | $ | 48,616 |
Foreign income |  | 18,335 |  |  | 35,727 |  |  | 26,746 |
Total income |  | $ | 83,769 |  |  | $ | 150,948 |  |  | $ | 75,362 |
Included within the foreign income before income taxes above is $23.6 million, $22.4 million, and $14.7 million of foreign sourced income subject to foreign withholding taxes in 2022, 2021, and 2020, respectively. A summary of the expense (benefit) for income tax follows (in thousands):
|  | 2022 |  | 2021 |  | 2020
Current: |  |  |  |  |  |
Federal |  | $ | 3,496 |  |  | $ | 10,591 |  |  | $ | 16,400 |
Foreign |  | 5,335 |  |  | 8,812 |  |  | 6,047 |
State and local |  | 2,791 |  |  | 2,837 |  |  | 1,569 |
Deferred: |  |  |  |  |  |
Federal |  | 4,243 |  |  | 2,430 |  |  | (7,375) |
Foreign |  | (1,152) |  |  | 769 |  |  | 357 |
State and local |  | (293) |  |  | 554 |  |  | (2,250) |
Total income tax expense |  | $ | 14,420 |  |  | $ | 25,993 |  |  | $ | 14,748 |
The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the years ended December 25, 2022, December 26, 2021 and December 27, 2020 is as follows in both dollars and as a percentage of income before income taxes (dollars in thousands):
|  | 2022 |  | 2021 |  | 2020
|  | Income Tax Expense (Benefit) |  | Income Tax Rate |  | Income Tax Expense (Benefit) |  | Income Tax Rate |  | Income Tax Expense (Benefit) |  | Income Tax Rate
Tax at U.S. federal statutory rate |  | $ | 17,591 |  |  | 21.0 | % |  | $ | 31,699 |  |  | 21.0 | % |  | $ | 15,826 |  |  | 21.0 | %
State and local income taxes |  | 1,422 |  |  | 1.7 | % |  | 2,317 |  |  | 1.5 | % |  | 1,149 |  |  | 1.5 | %
Foreign income taxes |  | 4,672 |  |  | 5.6 | % |  | 9,144 |  |  | 6.1 | % |  | 6,463 |  |  | 8.6 | %
Income of consolidated partnerships attributable to noncontrolling interests |  | (355) |  |  | (0.4) | % |  | (1,110) |  |  | (0.7) | % |  | (603) |  |  | (0.8) | %
Non-qualified deferred compensation plan expense (income) |  | 1,278 |  |  | 1.5 | % |  | (911) |  |  | (0.6) | % |  | (898) |  |  | (1.2) | %
Excess tax (benefits) on equity awards |  | (3,902) |  |  | (4.7) | % |  | (3,697) |  |  | (2.5) | % |  | (2,029) |  |  | (2.7) | %
Tax credits |  | (8,981) |  |  | (10.7) | % |  | (8,830) |  |  | (5.9) | % |  | (6,002) |  |  | (8.0) | %
Non-deductible executive compensation |  | 2,450 |  |  | 2.9 | % |  | 2,636 |  |  | 1.7 | % |  | 1,314 |  |  | 1.7 | %
Foreign-derived intangible income |  | (1,452) |  |  | (1.7) | % |  | (1,519) |  |  | (1.0) | % |  | (924) |  |  | (1.2) | %
US deferred offset on foreign deferreds |  | 1,183 |  |  | 1.4 | % |  | 238 |  |  | 0.2 | % |  | — |  |  | — | %
Other |  | 514 |  |  | 0.6 | % |  | (3,974) |  |  | (2.6) | % |  | 452 |  |  | 0.6 | %
Total |  | $ | 14,420 |  |  | 17.2 | % |  | $ | 25,993 |  |  | 17.2 | % |  | $ | 14,748 |  |  | 19.5 | %
Significant deferred tax assets (liabilities) follow (in thousands):
|  | December 25, 2022 |  | December 26, 2021
Accrued liabilities |  | $ | 17,424 |  |  | $ | 14,802 |
Accrued bonuses |  | 351 |  |  | 6,404 |
Other liabilities and asset reserves |  | 14,607 |  |  | 14,583 |
Equity awards |  | 7,905 |  |  | 7,323 |
Lease liabilities |  | 45,646 |  |  | 41,999 |
Other |  | 2,904 |  |  | 2,712 |
Net operating losses |  | 11,738 |  |  | 8,127 |
Foreign tax credit carryforwards |  | 20,198 |  |  | 18,611 |
Total deferred tax assets |  | 120,773 |  |  | 114,561 |
Valuation allowances |  | (32,052) |  |  | (28,598) |
Total deferred tax assets, net of valuation allowances |  | 88,721 |  |  | 85,963 |
Deferred expenses |  | (5,756) |  |  | (7,087) |
Accelerated depreciation |  | (31,098) |  |  | (23,858) |
Goodwill |  | (7,690) |  |  | (10,052) |
Right-of-use assets |  | (41,892) |  |  | (39,814) |
Other |  | (365) |  |  | (254) |
Total deferred tax liabilities |  | (86,801) |  |  | (81,065) |
Net deferred tax assets |  | $ | 1,920 |  |  | $ | 4,898 |
The following table summarizes changes in the Company’s valuation allowances on deferred tax (in thousands):
Balance at December 27, 2020 | $ | 22,972
Charged to costs and expenses | 5,658
Other | (32)
Balance at December 26, 2021 | $ | 28,598
Charged to costs and expenses | 3,454
Balance at December 25, 2022 | $ | 32,052
The Company had approximately $10.2 million and $8.8 million of state deferred tax assets primarily related to state net operating loss carryforwards as of December 25, 2022 and December 26, 2021, respectively. Our ability to utilize these state deferred tax assets is dependent on our ability to generate earnings in future years in the respective state jurisdictions. The Company provided a full valuation allowance of $10.2 million and $8.8 million for these state deferred tax assets as we believe realization based on the more-likely-than-not criteria has not been met as of December 25, 2022 and December 26, 2021, respectively. The Company had approximately $2.0 million and $1.4 million of state deferred tax assets related to state income tax credit carryforwards as of December 25, 2022 and December 26, 2021, respectively. Our ability to fully utilize these deferred tax assets related to state income tax credit carryforwards is dependent on our ability to generate earnings in future years in the respective state jurisdictions. In 2022, the Company provided a partial valuation allowance of $0.5 million against these state deferred tax assets as we believe that a portion of these state income tax credit carryforwards would not be realizable before expiration. The Company had approximately $8.7 million and $4.5 million of foreign net operating loss and capital loss carryovers as of December 25, 2022 and December 26, 2021, respectively. The Company had approximately $1.2 million of valuation allowances primarily related to the foreign capital losses at both December 25, 2022 and December 26, 2021. A substantial majority of our foreign net operating losses do not have an expiration date. In addition, the Company had approximately $20.2 million and $18.6 million in foreign tax credit carryforwards as of December 25, 2022 and December 26, 2021, respectively, that expire ten years from inception in years 2026 through 2032. Our ability to utilize these foreign tax credit carryforwards is dependent on our ability to generate foreign earnings in future years sufficient to claim foreign tax credits in excess of foreign taxes paid in those years. The Company provided a full valuation allowance of $20.2 million and $18.6 million for these foreign tax credit carryforwards as we believe realization based on the more-likely-than-not criteria has not been met as of December 25, 2022 and December 26, 2021, respectively. Cash for income taxes paid were $11.7 million in 2022, $32.6 million in 2021 and $19.3 million in 2020. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company, with few exceptions, is no longer subject to U.S. federal, state and local, or non-US income tax examinations by tax authorities for years before 2018. The Company is currently undergoing examinations by various tax authorities. The Company anticipates that the finalization of these current examinations and other issues could result in a decrease in the liability for unrecognized tax benefits (and a decrease of income tax expense) of approximately $68,000 during the next 12 months. The Company had $1.2 million of unrecognized tax benefits at December 25, 2022 which, if recognized, would affect the effective tax rate. A reconciliation of the beginning and ending liability for unrecognized tax benefits excluding interest and penalties is as follows, which is recorded in Other long-term liabilities in the Consolidated Balance Sheets (in thousands):
Balance at December 27, 2020 | $ | 1,030 |
Additions for tax positions of prior years | 81 |
Reductions for tax positions of prior years | (215) |
Balance at December 26, 2021 | $ | 896 |
Additions for tax positions of prior years | 331 |
Reductions for tax positions of prior years | (65) |
Balance at December 25, 2022 | $ | 1,162 |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. The Company has accrued approximately $146,000 and $132,000 for the payment of interest and penalties as of December 25, 2022 and December 26, 2021, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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