Income Taxes:

For financial reporting purposes, income (loss) before income taxes includes the following components:



		Successor									Predecessor
		Fiscal Year			Fiscal Year			For the 317 Day Period Ended			For the 47 Day Period Ended
		2016			2015			December 28, 2014			February 14, 2014
	(in thousands)
United States		$	(11,002	)	$	(18,787	)	$	(91,339	)	$	1,158
Foreign (including U.S. Possessions)		4,709			3,336			(1,872		)	564
Income (loss) before income taxes		$	(6,293	)	$	(15,451	)	$	(93,211	)	$	1,722

Our income tax expense (benefit) consists of the following for the periods presented:



		Successor									Predecessor
		Fiscal Year			Fiscal Year			For the 317 Day Period Ended			For the 47 Day Period Ended
		2016			2015			December 28, 2014			February 14, 2014
	(in thousands)
Current tax expense (benefit):
Federal		$	8,008		$	10,726		$	26,702		$	2,505
State		3,879			1,825			4,984			390
Foreign		1,008			1,256			(255		)	(92		)
		12,895			13,807			31,431			2,803
Deferred tax expense (benefit):
Federal		(11,848		)	(14,022		)	(52,251		)	(2,282		)
State		(3,274		)	(2,203		)	(9,909		)	302
Foreign		(399		)	(523		)	(394		)	195
		(15,521		)	(16,748		)	(62,554		)	(1,785		)
Income tax expense (benefit)		$	(2,626	)	$	(2,941	)	$	(31,123	)	$	1,018

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



	Successor						Predecessor
	Fiscal Year		Fiscal Year		For the 317 Day Period Ended		For the 47 Day Period Ended
	2016		2015		December 28, 2014		February 14, 2014
Federal statutory rate	(35.0	)%	(35.0	)%	(35.0	)%	35.0	%
State income taxes, net of federal benefit	2.5	%	0.2	%	(3.8	)%	20.5	%
Federal income tax credits, net	(21.8	)%	(7.6	)%	(0.4	)%	(2.0	)%
Merger and litigation related costs	5.8	%	25.0	%	4.8	%	3.1	%
Canadian tax rate difference	2.4	%	1.0	%	0.2	%	(1.8	)%
Canadian nondeductible interest	1.8	%	0.6	%	0.1	%	0.7	%
State tax credit, valuation adjustment	2.8	%	(1.3	)%	0.4	%	5.6	%
Other	(0.2	)%	(1.9	)%	0.3	%	(2.0	)%
Effective tax rate	(41.7	)%	(19.0	)%	(33.4	)%	59.1	%



	January 1, 2017			January 3, 2016
	(in thousands)
Deferred tax assets:
Accrued compensation	$	3,580		$	3,059
Unearned revenue	1,723			1,493
Deferred rent	8,148			5,520
Stock-based compensation	746			501
Accrued insurance and employee benefit plans	5,542			5,162
Unrecognized tax benefits ⁽¹⁾	1,072			1,378
NOL and other carryforwards	3,358			5,660
Loan costs	1,170			1,461
Other	914			514
Gross deferred tax assets	26,253			24,748
Deferred tax liabilities:
Depreciation and amortization	(24,717		)	(40,976		)
Prepaid assets	(655		)	(895		)
Intangibles	(180,623		)	(181,546		)
Favorable/Unfavorable Leases	(26		)	(1		)
Internal use software and other	(6,522		)	(3,064		)
Gross deferred tax liabilities	(212,543		)	(226,482		)
Net deferred tax liability	$	(186,290	)	$	(201,734	)

_________________


(1)	Amount represents the value of future tax benefits that would result if the liabilities for uncertain state tax positions and accrued interest related to uncertain tax positions are settled.

As of January 1, 2017, we have $4.5 million of federal net operating loss carryforwards (which expire at the end of 2030), $0.3 million of state net operating loss carryforwards (expiring at the end of tax years 2019 through 2036), and $0.4 million of Alternative Minimum Tax credit carryforwards (with an indefinite carryforward period). The federal net operating loss and $0.3 million of the Alternative Minimum Tax credit carryforward relate to the acquisition of Peter Piper Pizza, which are limited by Section 382 of the Internal Revenue Code. However, we do not believe the Section 382 limitation will prevent us from fully utilizing the carryforwards. As of January 1, 2017, we also have state income tax credit carryforwards of $1.0 million net of their related valuation allowance and federal tax effect (which expire at the end of 2022 through 2026) and $1.3 million of Canadian net operating loss carryforwards (expiring at the end of tax years 2034 through 2036).

We file numerous federal, state, and local income tax returns in the U.S. and some foreign jurisdictions. As a matter of ordinary course, we are subject to regular examination by various tax authorities. Certain of our federal and state income tax returns are currently under examination and are in various stages of the audit/appeals process. In general, the U.S. federal statute of limitations has expired for our federal income tax returns filed for tax years ended before 2013 with the exception of the Peter Piper Pizza federal income tax returns with net operating losses which have been carried forward to open tax years (whereas, adjustments can be made to these returns until the respective statute of limitations expire for the particular tax years the net operating losses are utilized). In general, our state income tax statutes of limitations have expired for tax years ended before 2012. In general, the statute of limitations for our Canada income tax returns has expired for tax years ended before 2012.

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



	Fiscal Year
	2016			2015			2014
	(in thousands)
Balance at beginning of period	$	3,288		$	1,882		$	2,598
Additions for tax positions taken in the current year	74			214			168
Increases for tax positions taken in prior years	1,479			1,581			613
Decreases for tax positions taken in prior years	(964		)	(184		)	(421		)
Settlement with tax authorities	(558		)	79			(114		)
Expiration of statute of limitations	(200		)	(284		)	(962		)
Balance at end of period	$	3,119		$	3,288		$	1,882

Our liability for uncertain tax positions (excluding interest and penalties) was $3.1 million and $3.3 million as of January 1, 2017 and January 3, 2016, respectively, and if recognized would decrease our provision for income taxes by $1.5 million. Within the next twelve months, we could settle or otherwise conclude certain ongoing income tax audits. As such, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $1.0 million as a result of settlements with certain taxing authorities and expiring statutes of limitations within the next twelve months.

The total accrued interest and penalties related to unrecognized tax benefits as of January 1, 2017 and January 3, 2016, was $1.2 million and $1.7 million, respectively. On the Consolidated Balance Sheets, we include current accrued interest related to unrecognized tax benefits in “Accrued interest,” current accrued penalties in “Accrued expenses” and non-current accrued interest and penalties in “Other noncurrent liabilities.”