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Income Taxes | 12 Months Ended
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Dec. 29, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | 17. Income Taxes The following table presents the domestic and foreign components of income before income taxes for 2024, 2023 and 2022 (in thousands):
|  | 2024 |  | 2023 |  | 2022
Domestic income |  | $ | 126,681 |  |  | $ | 91,218 |  |  | $ | 65,434 |
Foreign income |  | (12,555) |  |  | 12,455 |  |  | 18,335 |
Total income |  | $ | 114,126 |  |  | $ | 103,673 |  |  | $ | 83,769 |
Included within the foreign income before income taxes above is $19.4 million, $24.1 million, and $23.6 million of foreign sourced income subject to foreign withholding taxes in 2024, 2023, and 2022, respectively. A summary of the expense (benefit) for income tax follows (in thousands):
|  | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |  |
Federal |  | $ | 22,443 |  |  | $ | 20,742 |  |  | $ | 3,496 |
Foreign |  | 6,844 |  |  | 3,916 |  |  | 5,335 |
State and local |  | 3,679 |  |  | 2,207 |  |  | 2,791 |
Deferred: |  |  |  |  |  |
Federal |  | (3,848) |  |  | (4,115) |  |  | 4,243 |
Foreign |  | 2,181 |  |  | (558) |  |  | (1,152) |
State and local |  | (1,370) |  |  | (1,318) |  |  | (293) |
Total income tax expense |  | $ | 29,929 |  |  | $ | 20,874 |  |  | $ | 14,420 |
The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the years ended December 29, 2024, December 31, 2023 and December 25, 2022 is as follows in both dollars and as a percentage of income before income taxes (dollars in thousands):
|  | 2024 |  | 2023 |  | 2022
|  | 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 |  | $ | 23,965 |  |  | 21.0 | % |  | $ | 21,771 |  |  | 21.0 | % |  | $ | 17,591 |  |  | 21.0 | %
State and local income taxes |  | 2,176 |  |  | 1.9 | % |  | 1,866 |  |  | 1.8 | % |  | 1,422 |  |  | 1.7 | %
Foreign income taxes |  | 7,242 |  |  | 6.4 | % |  | 3,755 |  |  | 3.6 | % |  | 4,605 |  |  | 5.5 | %
Income of consolidated partnerships attributable to noncontrolling interests |  | (161) |  |  | (0.1) | % |  | (159) |  |  | (0.2) | % |  | (355) |  |  | (0.4) | %
Non-qualified deferred compensation plan expense (income) |  | (750) |  |  | (0.7) | % |  | (752) |  |  | (0.7) | % |  | 1,278 |  |  | 1.5 | %
Excess tax (benefits) on equity awards |  | 1,027 |  |  | 0.9 | % |  | (539) |  |  | (0.5) | % |  | (3,902) |  |  | (4.7) | %
Tax credits |  | (4,413) |  |  | (3.9) | % |  | (7,003) |  |  | (6.8) | % |  | (8,981) |  |  | (10.7) | %
Non-deductible executive compensation |  | (216) |  |  | (0.2) | % |  | 1,341 |  |  | 1.3 | % |  | 2,450 |  |  | 2.9 | %
Foreign-derived intangible income |  | (842) |  |  | (0.7) | % |  | (1,263) |  |  | (1.2) | % |  | (1,452) |  |  | (1.7) | %
US deferred offset on foreign deferreds |  | (1,883) |  |  | (1.7) | % |  | 270 |  |  | 0.3 | % |  | 1,183 |  |  | 1.4 | %
Foreign tax deduction |  | (1,657) |  |  | (1.5) | % |  | — |  |  | — | % |  | — |  |  | — | %
Foreign valuation allowance |  | 6,597 |  |  | 5.8 | % |  | 1,386 |  |  | 1.3 | % |  | 67 |  |  | 0.1 | %
Other |  | (1,156) |  |  | (1.0) | % |  | 201 |  |  | 0.2 | % |  | 514 |  |  | 0.6 | %
Total |  | $ | 29,929 |  |  | 26.2 | % |  | $ | 20,874 |  |  | 20.1 | % |  | $ | 14,420 |  |  | 17.2 | %
Significant deferred tax assets (liabilities) follow (in thousands):
|  | December 29, 2024 |  | December 31, 2023
Accrued liabilities |  | $ | 12,660 |  |  | $ | 12,735 |
Accrued bonuses |  | 3,148 |  |  | 2,284 |
Other liabilities and asset reserves |  | 15,536 |  |  | 15,315 |
Equity awards |  | 7,542 |  |  | 7,988 |
Lease liabilities |  | 50,500 |  |  | 45,550 |
Other |  | 5,616 |  |  | 2,825 |
Net operating losses |  | 18,028 |  |  | 13,759 |
Foreign tax credit carryforwards |  | 23,071 |  |  | 23,888 |
Total deferred tax assets |  | 136,101 |  |  | 124,344 |
Valuation allowances |  | (44,463) |  |  | (37,609) |
Total deferred tax assets, net of valuation allowances |  | 91,638 |  |  | 86,735 |
Deferred expenses |  | (6,470) |  |  | (5,719) |
Accelerated depreciation |  | (19,144) |  |  | (23,012) |
Goodwill |  | (8,090) |  |  | (7,881) |
Right-of-use assets |  | (45,803) |  |  | (41,513) |
Other |  | (1,384) |  |  | (1,071) |
Total deferred tax liabilities |  | (80,891) |  |  | (79,196) |
Net deferred tax assets |  | $ | 10,747 |  |  | $ | 7,539 |
The following table summarizes changes in the Company’s valuation allowances on deferred tax (in thousands):
Balance at December 25, 2022 | $ | 32,052
Charged to costs and expenses | 5,470
Other | 87
Balance at December 31, 2023 | $ | 37,609
Charged to costs and expenses | 6,642
Other | 212
Balance at December 29, 2024 | $ | 44,463
The Company had approximately $11.7 million and $10.3 million of state deferred tax assets in separate company jurisdictions primarily related to state net operating loss carryforwards as of December 29, 2024 and December 31, 2023, 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 $11.7 million and $10.3 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 29, 2024 and December 31, 2023, respectively. The Company had approximately $3.8 million and $3.0 million of state deferred tax assets related to state income tax credit carryforwards as of December 29, 2024 and December 31, 2023, 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. The Company provided a partial valuation allowance of $0.5 million and $0.7 million against these state deferred tax assets at December 29, 2024 and December 31, 2023, respectively. We believe that a portion of these state income tax credit carryforwards would not be realizable before expiration. The Company had approximately $9.2 million and $4.6 million of foreign net operating loss, capital loss carryovers and foreign deferred tax assets as of December 29, 2024 and December 31, 2023, respectively. The Company had approximately $9.2 million and $2.7 million of valuation allowances primarily related to the foreign net operating losses, foreign capital losses and foreign deferred tax assets at both December 29, 2024 and December 31, 2023. A substantial majority of our foreign net operating losses do not have an expiration date. In addition, the Company had approximately $23.1 million and $23.9 million in foreign tax credit carryforwards as of December 29, 2024 and December 31, 2023, respectively, that expire ten years from inception in years 2028 through 2034. 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 $23.1 million and $23.9 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 29, 2024 and December 31, 2023, respectively. Cash for income taxes paid were $36.3 million in 2024, $12.5 million in 2023 and $11.7 million in 2022. 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 2020. The Company is currently undergoing examinations by various tax authorities. The Company had $1.3 million of unrecognized tax benefits at December 29, 2024 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 25, 2022 | $ | 1,162 |
Additions for tax positions of prior years | 217 |
Reductions for tax positions of prior years | (321) |
Balance at December 31, 2023 | $ | 1,058 |
Additions for tax positions of prior years | 276 |
Reductions for tax positions of prior years | (45) |
Balance at December 29, 2024 | $ | 1,289 |
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. The Company has accrued approximately $0.2 million for the payment of interest and penalties as of December 29, 2024 and December 31, 2023.

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