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INCOME TAXES | 12 Months Ended
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Dec. 28, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Provision for Income Taxes The provision for income taxes consisted of the following:
| Fiscal year ended
(dollars in thousands) | December 28, 2024 |  | December 30, 2023 |  | December 31, 2022
Current tax provision: |  |  |  |  |
Federal | $ | 33,397 |  |  | $ | 47,643 |  |  | $ | 43,569 |
State | 7,422 |  |  | 8,943 |  |  | 8,307 |
Foreign | 10,903 |  |  | 13,756 |  |  | 15,562 |
Total current provision | $ | 51,722 |  |  | $ | 70,342 |  |  | $ | 67,438 |
Deferred tax (benefit) provision: |  |  |  |  |
Federal | $ | (3,965) |  |  | $ | (148) |  |  | $ | (1,484) |
State | (25) |  |  | (512) |  |  | 425 |
Foreign | (2,432) |  |  | 60 |  |  | 319 |
Total deferred benefit | (6,422) |  |  | (600) |  |  | (740) |
Total provision | $ | 45,300 |  |  | $ | 69,742 |  |  | $ | 66,698 |
The foreign portion of the tax position substantially relates to the Company’s international operations in Canada, Hong Kong and Mexico, in addition to foreign tax withholdings related to the Company’s foreign royalty income. The Company plans to repatriate undistributed earnings from Hong Kong and has provided for deferred income taxes related to these earnings. Since the current U.S. tax regime taxes foreign earnings in the year earned, taxes associated with repatriation are not material. Deferred income taxes have not been provided for undistributed foreign earnings from Canada or Mexico, or any additional outside basis difference inherent in all foreign entities, as these amounts continue to be indefinitely reinvested in foreign operations. Total undistributed earnings from the Company’s subsidiaries in Canada and Mexico amounted to $101.3 million. Unrecognized deferred tax liability related to undistributed earnings from the Company’s subsidiaries in Canada and Mexico is estimated to be approximately $4.8 million, based on applicable withholding taxes, levels of foreign income previously taxed in the U.S. and applicable foreign tax credit limitations. The company accounts for the additional U.S. income tax on its foreign earnings under Global Intangible Low-Taxed Income (“GILTI”) as a period expense in the period in which additional tax is due. The components of income before income taxes were as follows:
| Fiscal year ended
(dollars in thousands) | December 28, 2024 |  | December 30, 2023 |  | December 31, 2022
Domestic | $ | 167,741 |  |  | $ | 240,627 |  |  | $ | 227,929 |
Foreign | 63,068 |  |  | 61,615 |  |  | 88,807 |
Total | $ | 230,809 |  |  | $ | 302,242 |  |  | $ | 316,736 |
Effective Rate Reconciliation The difference between the Company’s effective income tax rate and the federal statutory tax rate is reconciled below:
| Fiscal year ended
| December 28, 2024 |  | December 30, 2023 |  | December 31, 2022
Statutory federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal income tax benefit | 2.9 | % |  | 3.0 | % |  | 2.8 | %
Impact of foreign operations | (3.4) | % |  | (0.8) | % |  | (2.0) | %
Settlement of uncertain tax positions | (0.5) | % |  | (0.6) | % |  | (0.7) | %
Benefit from stock-based compensation | — | % |  | — | % |  | (0.1) | %
Other | (0.4) | % |  | 0.5 | % |  | 0.1 | %
Total | 19.6 | % |  | 23.1 | % |  | 21.1 | %
The Company and its subsidiaries file a consolidated United States federal income tax return, as well as separate and combined income tax returns in numerous state and foreign jurisdictions. In most cases, the Company is no longer subject to U.S. tax authority examinations for years prior to fiscal 2021. Deferred Taxes The following table reflects the Company’s calculation of the components of deferred tax assets and liabilities as of December 28, 2024 and December 30, 2023.
(dollars in thousands) | December 28, 2024 |  | December 30, 2023
Deferred tax assets: | Assets (Liabilities)
Accounts receivable allowance | $ | 4,321 |  |  | $ | 5,263 |
Inventory | 12,408 |  |  | 14,271 |
Accrued liabilities | 8,810 |  |  | 11,208 |
Equity-based compensation | 3,886 |  |  | 3,511 |
Deferred employee benefits | 3,062 |  |  | 3,397 |
Leasing liabilities | 128,904 |  |  | 105,756 |
Other | 5,078 |  |  | 4,771 |
Total deferred tax assets | 166,469 |  |  | 148,177 |
Deferred tax liabilities: |  |  |
Depreciation | (19,060) |  |  | (19,654) |
Leasing assets | (115,419) |  |  | (93,943) |
Tradename and licensing agreements | (63,144) |  |  | (71,361) |
Other | (2,712) |  |  | (2,516) |
Total deferred tax liabilities | (200,335) |  |  | (187,474) |
Net deferred tax liability | $ | (33,866) |  |  | $ | (39,297) |
Amounts recognized in the consolidated balance sheets:
(dollars in thousands) | December 28, 2024 |  | December 30, 2023
| Assets (Liabilities)
Deferred tax assets | $ | 4,344 |  |  | $ | 2,173 |
Deferred tax liabilities | (38,210) |  |  | (41,470) |
Net deferred tax liability | $ | (33,866) |  |  | $ | (39,297) |
Uncertain Tax Positions The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:
(dollars in thousands) |
Balance at January 1, 2022 | $ | 8,856 |
Additions based on tax positions related to fiscal 2022 | 1,040 |
Reductions for prior year tax positions | — |
Reductions for lapse of statute of limitations | (2,803) |
Balance at December 31, 2022 | $ | 7,093 |
Additions based on tax positions related to fiscal 2023 | 1,545 |
Reductions for prior year tax positions | — |
Reductions for lapse of statute of limitations | (2,373) |
Balance at December 30, 2023 | $ | 6,265 |
Additions based on tax positions related to fiscal 2024 | 1,500 |
Reductions for prior year tax positions | — |
Reductions for lapse of statute of limitations | (1,255) |
Balance at December 28, 2024 | $ | 6,510 |
As of December 28, 2024, the Company had gross unrecognized tax benefits of $6.5 million, of which $5.7 million, if ultimately recognized, will affect the Company’s effective tax rate in the period settled. The Company has recorded tax positions for which the ultimate deductibility is more likely than not, but for which there is uncertainty about the timing of such deductions. Because of deferred tax accounting, changes in the timing of these deductions would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authorities. Included in the reserves for unrecognized tax benefits are $1.5 million of reserves for which the statute of limitations is expected to expire within the next fiscal year. If these tax benefits are ultimately recognized, such recognition, net of federal income taxes, may affect the annual effective tax rate for fiscal 2025 and the effective tax rate in the quarter in which the benefits are recognized. The Company recognizes interest related to unrecognized tax benefits as a component of interest expense and penalties related to unrecognized tax benefits as a component of income tax expense. During fiscal 2024, fiscal 2023, and fiscal 2022, expense recorded on uncertain tax positions was not material. The Company had accrued interest on uncertain tax positions of $1.6 million and $1.5 million as of December 28, 2024 and December 30, 2023, respectively.

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