Income Taxes

12 Months Ended

Dec. 25, 2021

Income Taxes [Abstract]

Income Taxes

Note 9    Income Taxes

(amounts in thousands)	2021		2020		2019
Current:
Federal	$	20,771	$	29,121	$	11,779
State		6,374		9,984		3,117
Deferred:
Federal		8,074		4,090		6,636
State		4,239		1,567		(871)
	$	39,458	$	44,762	$	20,661

The reconciliation of income taxes computed at the federal statutory rate of 21% in 2021, 2020 and 2019. Ending deferred tax liability has been computed at the federal statutory rate of 21%.

(amounts in thousands)	2021		2020		2019
Income taxes at federal statutory rate	$	31,144	$	34,373	$	18,615
State income taxes, net of federal income tax benefit		6,207		7,261		1,333
Nondeductible employee-related expenses		2,530		2,223		1,974
Other		(423)		905		(1,261)
Provision for income taxes	$	39,458	$	44,762	$	20,661

The effective income tax rate was 26.6%, 27.3% and 23.3% in 2021, 2020, and 2019, respectively. The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes as well as nondeductible employee expenses. Not all the Company’s tax credits and state deductions are driven proportionately by taxable income levels, due to these items and the significant increase in taxable income from prior years, the result was a higher effective income tax rate for 2021 and 2020 when compared to 2019.

Note 9    Income Taxes (continued)

Cash paid for federal income taxes was $20.4 million, $33.5 million $11.3 million and in 2021, 2020 and 2019 respectively. Cash paid for state income taxes was $4.4 million, $8.8 million and $2.8 million in 2021, 2020 and 2019 respectively.

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 25, 2021 and December 26, 2020, are:

(amounts in thousands)	2021		2020
Deferred tax assets:
Accounts receivable	$	951	$	659
Employment incentives		6,886		6,204
Self-insurance liability		9,324		8,515
Postretirement benefit obligations		7,412		6,527
Net operating loss and credit carryforwards		6,202		7,787
Unrecognized Tax Benefits		2,108		1,751
Other		1,830		1,407
Total deferred tax assets		34,713		32,850
Deferred tax liabilities:
Inventories		(16,038)		(13,407)
Unrealized gains on marketable securities		(2,177)		(3,059)
Prepaids		(6,365)		(5,993)
Nondeductible accruals and other		-		(332)
Depreciation		(125,220)		(113,463)
Total deferred tax liabilities		(149,800)		(136,254)
Net deferred tax liability	$	(115,087)	$	(103,404)

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

(amounts in thousands)	2021		2020
Unrecognized tax benefits at beginning of year	$	8,337	$	6,612
Increases based on tax positions related to the current year		1,699		1,725
Additions for tax positions of prior year		—		—
Reductions for tax positions of prior years		—		—
Settlements		—		—
Expiration of the statute of limitations for assessment of taxes		—		—
Unrecognized tax benefits at end of year	$	10,036	$	8,337

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $1.7 million in 2021, $1.7 million in 2020 and $1.8 million in 2019.

The Company or one of its subsidiaries files tax returns in the United States and various state jurisdictions. The tax years subject to examination in the United States and in Pennsylvania, where the majority of the Company’s revenues are generated, are 2016 to 2021.

The Company has net operating loss carryforwards of $55 million available for state income tax purposes. The net operating losses will begin to expire starting in 2027. The Company expects to fully utilize these net operating loss carryforwards.