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Income Tax (Tables)

12 Months Ended

Jan. 02, 2021

Income Tax Disclosure [Abstract]

Summary of Income Tax Provision for Continuing Operations

The income tax provision for continuing operations is made up of the following components:

	2020					2019					2018
(In thousands)	(53 Weeks)					(52 Weeks)					(52 Weeks)
Current income tax expense (benefit):
Federal	$		1,844			$		(899	)		$		(1,607	)
State			5,149					817					1,107
Total current income tax expense (benefit)			6,993					(82	)				(500	)
Deferred income tax expense (benefit):
Federal			5,637					126					8,370
State			(3,180	)				(2,386	)				(963	)
Total deferred income tax expense (benefit)			2,457					(2,260	)				7,407
Total income tax expense (benefit)	$		9,450			$		(2,342	)		$		6,907

Reconciliation of Statutory Federal Rate to Effective Rate

A reconciliation of the statutory federal rate to the effective rate is as follows:

	2020					2019					2018
	(53 Weeks)					(52 Weeks)					(52 Weeks)
Federal statutory income tax rate		21.0		%			21.0		%			21.0		%
Stock compensation		0.7					7.2					0.7
Non-deductible expenses		1.9					0.8					0.6
Federal rate change effect on deferred taxes		—					—					(1.2	)
Change in tax contingencies		0.9					—					(2.5	)
Charitable product donations		(0.2	)				(5.6	)				(0.6	)
Other, net		(1.0	)				(2.4	)				(0.9	)
Federal loss carryback (a)		(11.9	)				—					—
State taxes, net of federal income tax benefit		1.7					(36.1	)				1.7
Tax credits		(2.0	)				(50.4	)				(1.8	)
Effective income tax rate		11.1		%			(65.5	)	%			17.0		%

(a) On March 27, 2020, the U.S. government enacted tax legislation to provide economic stimulus and support businesses and individuals during the COVID-19 pandemic, referred to as the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. In connection with the CARES Act, the Company recorded net discrete income tax benefits of $10.1 million in 2020 associated with the additional deductibility of certain expenses combined with provisions which enable companies to carry back tax losses to years prior to the enactment of the Tax Cuts and Jobs Act (“Tax Reform”), where the federal statutory income tax rate was 35%. As a result of carrying back losses to previous tax years, the Company recorded $0.8 million in expense to reinstate tax contingencies which had previously expired, included in the “Change in tax contingencies” line in the table above.

Summary of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities resulting from temporary differences as of January 2, 2021 and December 28, 2019 are as follows:

				January 2,					December 28,
(In thousands)				2021					2019
Deferred tax assets:
Employee benefits				$		33,115			$		17,087
Accrued workers' compensation						1,834					1,632
Allowance for doubtful accounts						1,688					10,870
Intangible assets						2,203					1,319
Restructuring						377					472
Deferred revenue						1,679					1,678
Stock warrants						1,896					—
Lease liabilities						87,606					85,005
Accrued insurance						964					1,007
Federal net operating loss carryforwards (a)						—					2,332
Federal credits						—					851
State net operating loss carryforwards (a)						6,175					4,498
All other						2,481					4,472
Total deferred tax assets						140,018					131,223
Deferred tax liabilities:
Property and equipment						47,472					45,136
Lease assets						77,673					73,191
Inventory						33,531					33,739
Goodwill						26,025					21,404
All other						1,045					864
Total deferred tax liabilities						185,746					174,334
Net deferred tax liability				$		45,728			$		43,111

(a) As of January 2, 2021, the Company’s state net operating loss carryforwards in various taxing jurisdictions expire in tax years 2021 through 2040 if not utilized.

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(In thousands)				2020					2019
Balance at beginning of year				$		1,425			$		1,477
Gross increases - tax positions taken in prior years						910					71
Gross decreases - tax positions taken in prior years						(1,000	)				(125	)
Gross increases - tax positions taken in current year						—					850
Lapsed statutes of limitations						(18	)				(848	)
Balance at end of year				$		1,317			$		1,425

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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