XML 36 R21.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Income Taxes | 12 Months Ended
--- | ---
Dec. 28, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provisions for income taxes were as follows:
| Fiscal Year Ended
| December 28, 2016 |  | December 30, 2015 |  | December 31, 2014
| (In thousands)
Current: |  |  |  |  |
Federal | $ | 4,270 |  |  | $ | 1,622 |  |  | $ | 377 |
State and local | 2,316 |  |  | 1,382 |  |  | 1,818 |
Foreign | 912 |  |  | 873 |  |  | 896 |
Deferred: |  |  |  |  |
Federal | 8,225 |  |  | 12,264 |  |  | 13,269 |
State and local | 619 |  |  | 1,742 |  |  | (54 | )
Increase (release) of valuation allowance | 132 |  |  | (130 | ) |  | (270 | )
Total provision for income taxes | $ | 16,474 |  |  | $ | 17,753 |  |  | $ | 16,036 |
The reconciliation of income taxes at the U.S. federal statutory tax rate to our effective tax rate was as follows:
| December 28, 2016 |  | December 30, 2015 |  | December 31, 2014
Statutory provision rate | 35 | % |  | 35 | % |  | 35 | %
State and local taxes, net of federal income tax benefit | 9 |  |  | 6 |  |  | 3 |
Foreign taxes, net of federal income tax benefit | — |  |  | — |  |  | 1 |
Wage addback on income tax credits earned | 3 |  |  | 2 |  |  | 2 |
General business credits generated | (9 | ) |  | (6 | ) |  | (6 | )
Foreign tax credits generated | (12 | ) |  | (2 | ) |  | — |
Pension plan liquidation | 18 |  |  | — |  |  | — |
Other | 2 |  |  | (2 | ) |  | (1 | )
Release of valuation allowance | — |  |  | — |  |  | (1 | )
Effective tax rate | 46 | % |  | 33 | % |  | 33 | %
For the 2016 period, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state taxes, the generation of employment tax credits, the Pension Plan liquidation, and foreign tax credits generated with the filings of federal amended tax returns. The 2016 rates were impacted by the recognition of a $2.1 million tax benefit related to the $24.3 million pre-tax settlement loss on the Pension Plan liquidation. This benefit was at a rate lower than the effective tax rate due to the previous recognition of an approximate $7.2 million tax benefit recognized with the reversal of our valuation allowance in 2011. In addition, we amended prior years’ U.S. tax returns in order to maximize a foreign tax credit in lieu of a foreign tax deduction, resulting in a net tax benefit of approximately $3.7 million during the year. The following table represents the approximate tax effect of each significant type of temporary difference that resulted in deferred income tax assets or liabilities.
| December 28, 2016 |  | December 30, 2015
| (In thousands)
Deferred tax assets: |  |  |
Self-insurance accruals | $ | 7,791 |  |  | $ | 8,371 |
Capitalized leases | 2,298 |  |  | 2,083 |
Accrued exit cost | 1,074 |  |  | 935 |
Fixed assets | — |  |  | 1,638 |
Interest rate swaps | 294 |  |  | 647 |
Pension, other retirement and compensation plans | 12,378 |  |  | 11,570 |
Other accruals | 386 |  |  | 395 |
Alternative minimum tax credit carryforwards | 3,534 |  |  | 5,344 |
General business credit carryforwards - state and federal | 13,541 |  |  | 20,691 |
Net operating loss carryforwards - state | 11,753 |  |  | 12,172 |
Total deferred tax assets before valuation allowance | 53,049 |  |  | 63,846 |
Less: valuation allowance | (12,567 | ) |  | (12,395 | )
Total deferred tax assets | 40,482 |  |  | 51,451 |
Deferred tax liabilities: |  |  |
Intangible assets | (22,073 | ) |  | (22,190 | )
Deferred finance costs | (125 | ) |  | (102 | )
Fixed assets | (601 | ) |  | — |
Total deferred tax liabilities | (22,799 | ) |  | (22,292 | )
Net deferred tax asset | $ | 17,683 |  |  | $ | 29,159 |
At December 28, 2016, we had available, on a consolidated basis, federal general business credit carryforwards of approximately $17.0 million, most of which expire between 2030 and 2036, and alternative minimum tax (“AMT”) credit carryforwards of approximately $3.5 million, which never expire. Approximately $6.9 million of general business credit carryforwards are unrecognized in the schedule above and on our Consolidated Balance Sheets as a result of the application of ASC Paragraph 718-740-25-10, which delays their recognition in paid-in capital until they reduce taxes payable. It is more likely than not that we will be able to utilize our credit carryforwards prior to expiration. In addition, it is more likely than not we will be able to utilize all of our existing temporary differences and a portion of our state tax net operating losses and state tax credit carryforwards prior to their expiration. Of the $12.6 million valuation allowance remaining, approximately $9.7 million represents South Carolina net operating loss carryforwards that will never be utilized. An additional $2.0 million of the valuation allowance, if released, will be credited directly to paid-in capital. Prior to 2005, Denny’s had ownership changes within the meaning of Section 382 of the Internal Revenue Code. In general, Section 382 places annual limitations on the use of certain tax attributes, such as AMT tax credit carryforwards, in existence at the ownership change date. It is our position that any pre-2005 AMT tax credits can be utilized as of December 28, 2016. The occurrence of an additional ownership change could limit our ability to utilize our current income tax credits generated after 2004. The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits:
| December 28, 2016 |  | December 30, 2015
| (In thousands)
Balance, beginning of year | $ | — |  |  | $ | — |
Increases related to current-year tax positions | 1,180 |  |  | — |
Balance, end of year | $ | 1,180 |  |  | $ | — |
There was no interest expense associated with unrecognized tax benefits for the years ended December 28, 2016 or December 30, 2015. We file income tax returns in the U.S. federal jurisdictions and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2012. We remain subject to examination for U.S. federal taxes for 2013-2016 and in the following major state jurisdictions: California (2012-2016), Florida (2013-2016) and Texas (2013-2016).

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: 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 Reference 5: 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration