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Income Taxes | 12 Months Ended
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Dec. 30, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes In fiscal 2023, the Company’s statutory income tax rate was 25.3 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income tax rate of 4.3 percent. In fiscal 2022, the Company’s statutory income tax rate was 25.4 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income tax rate of 4.4 percent. In fiscal 2021, the Company’s statutory income tax rate was 25.8 percent and it was comprised of the federal statutory income tax rate of 21.0 percent and the blended state statutory income rate of 4.8 percent. The Company’s blended state income tax rate is impacted by the mix of income earned in various states and by the Company’s federal taxable income, both of which may differ from year to year. The Company’s effective income tax rate is impacted by the effects of permanent differences occurring throughout the fiscal year. For fiscal 2023, fiscal 2022, and fiscal 2021, the Company’s effective income tax rate was 40.7 percent, 25.0 percent, and 24.8 percent, respectively.
| Fiscal Year Ended December 30, 2023 |  | Fiscal Year Ended December 31, 2022 |  | Fiscal Year Ended January 1, 2022
| ($ amounts in thousands)
Income before provision for income taxes | $ | 81,886 |  |  | $ | 394,761 |  |  | $ | 393,876 |
Federal income taxes: |  |  |  |  |
Current | $ | 20,221 |  |  | $ | 75,617 |  |  | $ | 78,005 |
Deferred | 7,993 |  |  | 3,184 |  |  | (1,585) |
State income taxes: |  |  |  |  |
Current | 5,373 |  |  | 17,679 |  |  | 19,382 |
Deferred | (237) |  |  | 2,105 |  |  | 1,941 |
Provision for income taxes | $ | 33,350 |  |  | $ | 98,585 |  |  | $ | 97,743 |
Effective tax rate | 40.7 | % |  | 25.0 | % |  | 24.8 | %
The accounting for the one-time settlement for the single-employer defined benefit pension plan increased the effective income tax rate for fiscal 2023 by 14.8%. The Company’s provisions for income taxes are reconciled to the federal statutory amounts as follows:
| Fiscal Year Ended December 30, 2023 |  | Fiscal Year Ended December 31, 2022 |  | Fiscal Year Ended January 1, 2022
| (In thousands)
Federal income taxes computed at the federal statutory tax rate | $ | 17,196 |  |  | $ | 82,898 |  |  | $ | 82,628 |
State income taxes, net of federal benefit | 4,609 |  |  | 16,171 |  |  | 18,970 |
Valuation allowance change arising from state net operating losses | (621) |  |  | (193) |  |  | (3,018) |
Pension plan settlement (1) | 12,150 |  |  | — |  |  | — |
Uncertain tax positions | (356) |  |  | (333) |  |  | 91 |
Permanent differences arising from compensation | 746 |  |  | (71) |  |  | 686 |
Other | (374) |  |  | 113 |  |  | (1,614) |
Provision for income taxes | $ | 33,350 |  |  | $ | 98,585 |  |  | $ | 97,743 |
(1) $4.5 million was reclassified from accumulated other comprehensive income (loss) As of December 30, 2023, an income tax payable of $8.5 million is included on the Company’s consolidated balance sheet along with $1.1 million attributed to franchise taxes payable for a total of $9.6 million. As of December 31, 2022, a current income tax receivable of $9.9 million is included within Other current assets on the Company’s consolidated balance sheet. The Company’s financial statements contain certain deferred tax assets which primarily result from other temporary differences related to certain reserves, accrued liabilities, pension obligations, differences between book and tax depreciation and amortization, and state net operating losses. The Company records a valuation allowance against deferred tax assets when it is determined, based on the weight of available evidence, that it is more likely than not that some or all of the Company’s deferred tax assets will not be realized in the future. For fiscal 2023 and fiscal 2022, components of the Company’s deferred income tax assets and deferred income tax liabilities are as follows:
| December 30, 2023 |  | December 31, 2022
| (In thousands)
Deferred income tax assets: |  |  |
Inventory reserves | $ | 3,965 |  |  | $ | 5,268 |
Compensation-related accruals | 7,794 |  |  | 5,807 |
Accounts receivable | 708 |  |  | 612 |
Property and equipment | 41,308 |  |  | 44,870 |
Operating lease liability | 10,086 |  |  | 13,134 |
Pension plans | 2,832 |  |  | 2,885 |
Benefit from net operating loss carryovers | 4,317 |  |  | 4,995 |
Other | 220 |  |  | 397 |
Total gross deferred income tax assets | 71,230 |  |  | 77,968 |
Less: valuation allowances | (3,456) |  |  | (4,076) |
Total net deferred income tax assets | $ | 67,774 |  |  | $ | 73,892 |
Deferred income tax liabilities: |  |  |
Intangible assets | $ | (4,335) |  |  | $ | (4,559) |
Operating lease asset | (9,227) |  |  | (12,250) |
Other | (956) |  |  | (914) |
Total deferred income tax liabilities | (14,518) |  |  | (17,723) |
Deferred income tax asset, net | $ | 53,256 |  |  | $ | 56,169 |
Activity in the Company’s deferred tax asset valuation allowance for fiscal 2023 and 2022 was as follows:
| December 30, 2023 |  | December 31, 2022
| (In thousands)
Balance as of beginning of the fiscal year | $ | 4,076 |  |  | $ | 4,269 |
Valuation allowance increases (decreases) related to: |  |  |
State net operating loss carryforwards | (620) |  |  | (193) |
Balance as of end of the fiscal year | $ | 3,456 |  |  | $ | 4,076 |
The Company has recorded income tax and related interest liabilities where it believe certain tax positions are not more likely than not to be sustained if challenged. These balances are included in other noncurrent liabilities in the Company’s consolidated balance sheets. The following table summarizes the activity related to our gross unrecognized tax benefits:
| December 30, 2023 |  | December 31, 2022
| (In thousands)
Balance at beginning of the fiscal year | $ | 1,872 |  |  | $ | 2,205 |
Additions for tax positions of current year | 1,765 |  |  | — |
Reductions due to lapse of applicable statute of limitations | (356) |  |  | (333) |
Balance at end of the fiscal year | $ | 3,281 |  |  | $ | 1,872 |
Included in the unrecognized tax benefits as of December 30, 2023 and December 31, 2022, were approximately $1.5 million and $1.9 million, respectively of tax benefits that, if recognized, would reduce the Company’s annual effective tax rate for fiscal 2023 and 2022. No penalties were accrued for either 2023 or 2022. The Company has accrued interest associated with its unrecognized tax benefits which it releases as those benefits are realized due to the lapse of applicable statute of limitations. Interest expense associated with the Company’s unrecognized tax benefits is reported as interest expense, net in the Company’s consolidated statement of operations and comprehensive income. Such interest expense has not been material in any reporting period presented herein. Net Operating Losses At the end of fiscal 2023, the Company’s gross state net operating loss carryovers were $81.0 million and its tax-effected state net operating loss carryovers were $4.3 million, of which $3.5 million was subject to a valuation allowance arising from expiration dates when considered in conjunction with state limitations related to Internal Revenue Code (“IRC”) Section 382. At the end of fiscal 2022, the Company’s gross state net operating loss carryovers were $92.2 million and tax-effected state net operating loss carryovers were $5.0 million, of which $4.1 million was subject to a valuation allowance arising from expiration dates when considered in conjunction with state limitation related to IRC Section 382. The Company’s state net operating loss carryovers will expire in 1 to 20 years. Federal and State Tax Filings The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations and may be subject to audit based on periods that are not limited by applicable statutes. The Company’s U.S. federal income tax returns for tax years 2020, 2021 and 2022 remain subject to audit under the federal statute of limitations. The Company’s auditable state income tax returns vary depending on the jurisdiction and its applicable statute of limitations. Assessing Deferred Tax Assets Quarterly, the Company assesses the carrying value of its deferred tax assets for impairment by evaluating the weight of available evidence at the end of each fiscal quarter. In the evaluation of the weight of available evidence at the end of fiscal 2023, the Company considered the recent reported income in the current year, as well as the reported income for 2022 and 2021, which resulted in a three-year cumulative income situation as positive evidence which carried substantial weight. While this was substantial, it was not the only evidence evaluated. The Company also considered evidence related to the four sources of taxable income, to determine whether such positive evidence outweighed the negative evidence. The evidence considered included: •future reversals of existing taxable temporary differences; •future taxable income exclusive of reversing temporary differences and carryforwards; •taxable income in prior carryback years, if carryback is permitted under the tax law; and •tax planning strategies. In addition to the positive evidence discussed above, the Company considered as positive evidence forecasted future taxable income, the future timing of the reversal of its deferred tax assets and liabilities, and the evidence from business and tax planning strategies. At the end of fiscal 2023 and fiscal 2022, in the Company’s evaluation of the weight of available evidence, the Company concluded that its deferred tax assets were not impaired other than $3.5 million of the state net operating losses. Although the Company believes its estimates are reasonable in the carrying value of its valuation allowances against our deferred tax items, the ultimate determination of the appropriate amounts of valuation allowance involves significant judgement.

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