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Income Taxes
 12 Months Ended
Dec. 31, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes:
For financial reporting purposes, income (loss) before income taxes includes the following components:
 
 
Fiscal Year
 
 
2017
 
2016
 
2015
 
(in thousands)
     United States
 
$
(25,667
)
 
$
(11,002
)
 
$
(18,787
)
     Foreign (including U.S. Possessions)
 
4,442

 
4,709

 
3,336

Income (loss) before income taxes
 
$
(21,225
)
 
$
(6,293
)
 
$
(15,451
)


Our income tax expense (benefit) consists of the following for the periods presented:
 
 
Fiscal Year
 
 
2017
 
2016
 
2015
 
(in thousands)
Current tax expense (benefit):
 
 
 
 
 
 
     Federal
 
$
(2,668
)
 
$
8,008

 
$
10,726

     State
 
(708
)
 
3,879

 
1,825

     Foreign
 
960

 
1,008

 
1,256

 
 
(2,416
)
 
12,895

 
13,807

Deferred tax expense (benefit):
 

 
 
 
 
     Federal
 
(72,829
)
 
(11,848
)
 
(14,022
)
     State
 
(137
)
 
(3,274
)
 
(2,203
)
     Foreign
 
1,091

 
(399
)
 
(523
)
 
 
(71,875
)
 
(15,521
)
 
(16,748
)
Income tax expense (benefit)
 
$
(74,291
)
 
$
(2,626
)
 
$
(2,941
)

A reconciliation of the federal statutory income tax rate to our effective tax rate is as follows:
 
Fiscal Year
 
2017
 
2016
 
2015
Federal statutory rate
(35.0
)%
 
(35.0
)%
 
(35.0
)%
State income taxes, net of federal benefit
(4.5
)%
 
2.5
 %
 
0.2
 %
Federal income tax credits, net
(1.2
)%
 
(21.8
)%
 
(7.6
)%
Merger and litigation related costs
1.6
 %
 
5.8
 %
 
25.0
 %
Canadian tax rate difference
0.4
 %
 
2.4
 %
 
1.0
 %
Canadian nondeductible interest
0.7
 %
 
1.8
 %
 
0.6
 %
Canadian deferred tax valuation adjustment
5.7
 %
 
—
 %
 
—
 %
Canadian tax reorganization
(7.6
)%
 
—
 %
 
—
 %
State tax credit, valuation adjustment
2.0
 %
 
2.8
 %
 
(1.3
)%
Other
1.9
 %
 
(0.2
)%
 
(1.9
)%
     Effective tax rate (before impact of Tax Cuts and Jobs Act of 2017 (1))
(36.0
)%
 
(41.7
)%
 
(19.0
)%
Adjustment related to the Tax Cuts and Jobs Act of 2017 (1)
(314.0
)%
 
—
 %
 
—
 %
Adjusted effective tax rate
(350.0
)%
 
(41.7
)%
 
(19.0
)%

_________________
(1) The Tax Cuts and Jobs Act of 2017 (enacted on December 22, 2017) resulted in a decrease of our net deferred tax liability of $66.6 million and a corresponding benefit to our deferred federal income taxes for Fiscal 2017.
On December 22, 2017, the Tax Cuts and Jobs Act (the “TCJA”) was signed into law. The TCJA includes a number of provisions impacting us, including the lowering of the U.S. corporate tax rate from 35% to 21%, effective January 1, 2018, 100% bonus depreciation for qualifying capital expenditures acquired and placed into service after September 27, 2017, establishment of a territorial-style system for taxing foreign-source income, limitations on the deductibility of interest expense and increased limitations on compensation paid to the Chief Executive Officer, Chief Financial Officer, and next three highest compensated executive officers (Internal Revenue Code Section 162(m)) effective January 1, 2018.
The TCJA’s reduction in the U.S. corporate tax rate from 35% to 21% (effective for Fiscal 2018) and increased allowance for bonus depreciation will have a favorable impact on our future after tax net income and cash flows. While we were able to make provisional estimates for the impact of the TJCA, the actual results may differ from these estimates, due to, among other things, changes in our interpretations and assumptions relating to the changes made by the TCJA and additional guidance that is anticipated to be issued by the U.S. Treasury and Internal Revenue Service relating to (i) the newly enacted increase in bonus depreciation for qualifying assets acquired and placed in service after September 27, 2017, (ii) the expansion of the limitation under Section 162(m) relating to the deductibility of executive compensation in excess of $1.0 million, and (iii) the one-time transition tax, net of foreign tax credits and operating losses, on earnings of foreign subsidiaries that were previously deferred from U.S. tax.
Deferred income tax assets and liabilities consisted of the following at the dates presented:

 
December 31, 2017
 
January 1, 2017
 
(in thousands)
Deferred tax assets:
 
 
 
Accrued compensation
$
1,231

 
$
3,580

Unearned revenue
979

 
1,723

Deferred rent
6,914

 
8,148

Stock-based compensation
639

 
746

Accrued insurance and employee benefit plans
3,516

 
5,542

       Unrecognized tax benefits (1)
452

 
1,072

NOL and other carryforwards
3,211

 
3,358

Loan costs
577

 
1,170

Other
552

 
914

Gross deferred tax assets
18,071

 
26,253

Deferred tax liabilities:

 

Depreciation and amortization
(9,492
)
 
(24,717
)
Prepaid assets
(672
)
 
(655
)
Intangibles
(117,717
)
 
(180,623
)
Favorable/Unfavorable Leases
(65
)
 
(26
)
Internal use software and other
(4,311
)
 
(6,522
)
Gross deferred tax liabilities
(132,257
)
 
(212,543
)
Net deferred tax liability
$
(114,186
)
 
$
(186,290
)
_________________
(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 December 31, 2017, we have $9.9 million of federal net operating loss carryforwards (expiring at the end of tax years 2030 through 2037), $9.5 million of state net operating loss carryforwards (expiring at the end of tax years 2022 through 2037), and $0.5 million of Alternative Minimum Tax credit carryforwards (with an indefinite carryforward period). As of December 31, 2017, we also have state income tax credit carryforwards of $0.9 million net of their related valuation allowance (which expire at the end of 2022 through 2026) and $1.6 million of Canadian net operating loss carryforwards (expiring at the end of tax years 2034 through 2037), for which a full valuation allowance has been recorded.
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 2014 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 prior 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 2013. In general, the statute of limitations for our Canada income tax returns has expired for tax years ended before 2013.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
 
Fiscal Year
 
2017
 
2016
 
2015
 
(in thousands)
Balance at beginning of period
$
3,119

 
$
3,288

 
$
1,882

   Additions for tax positions taken in the current year
1,677

 
74

 
214

   Increases for tax positions taken in prior years
16

 
1,479

 
1,581

   Decreases for tax positions taken in prior years
(390
)
 
(964
)
 
(184
)
   Settlement with tax authorities
(32
)
 
(558
)
 
79

   Expiration of statute of limitations
(537
)
 
(200
)
 
(284
)
Balance at end of period
$
3,853

 
$
3,119

 
$
3,288


Our liability for uncertain tax positions (excluding interest and penalties) was $3.9 million and $3.1 million as of December 31, 2017 and January 1, 2017, respectively, and if recognized would decrease our provision for income taxes by $2.6 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 $1.1 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 December 31, 2017 and January 1, 2017, was $1.0 million and $1.2 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.”