Income Taxes

12 Months Ended

Dec. 29, 2024

Income Tax Disclosure [Abstract]

Income Taxes

17. Income Taxes

The following table presents the domestic and foreign components of income before income taxes for 2024, 2023 and 2022 (in thousands):

	2024		2023		2022
Domestic income	$	126,681	$	91,218	$	65,434
Foreign income	(12,555)		12,455		18,335
Total income	$	114,126	$	103,673	$	83,769

Included within the foreign income before income taxes above is $19.4 million, $24.1 million, and $23.6 million of foreign sourced income subject to foreign withholding taxes in 2024, 2023, and 2022, respectively.

A summary of the expense (benefit) for income tax follows (in thousands):

	2024		2023		2022
Current:
Federal	$	22,443	$	20,742	$	3,496
Foreign	6,844		3,916		5,335
State and local	3,679		2,207		2,791
Deferred:
Federal	(3,848)		(4,115)		4,243
Foreign	2,181		(558)		(1,152)
State and local	(1,370)		(1,318)		(293)
Total income tax expense	$	29,929	$	20,874	$	14,420

The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for the years ended December 29, 2024, December 31, 2023 and December 25, 2022 is as follows in both dollars and as a percentage of income before income taxes (dollars in thousands):

	2024				2023				2022
	Income Tax Expense (Benefit)		Income Tax Rate		Income Tax Expense (Benefit)		Income Tax Rate		Income Tax Expense (Benefit)		Income Tax Rate
Tax at U.S. federal statutory rate	$	23,965	21.0	%	$	21,771	21.0	%	$	17,591	21.0	%
State and local income taxes	2,176		1.9	%	1,866		1.8	%	1,422		1.7	%
Foreign income taxes	7,242		6.4	%	3,755		3.6	%	4,605		5.5	%
Income of consolidated partnerships attributable to noncontrolling interests	(161)		(0.1)	%	(159)		(0.2)	%	(355)		(0.4)	%
Non-qualified deferred compensation plan expense (income)	(750)		(0.7)	%	(752)		(0.7)	%	1,278		1.5	%
Excess tax (benefits) on equity awards	1,027		0.9	%	(539)		(0.5)	%	(3,902)		(4.7)	%
Tax credits	(4,413)		(3.9)	%	(7,003)		(6.8)	%	(8,981)		(10.7)	%
Non-deductible executive compensation	(216)		(0.2)	%	1,341		1.3	%	2,450		2.9	%
Foreign-derived intangible income	(842)		(0.7)	%	(1,263)		(1.2)	%	(1,452)		(1.7)	%
US deferred offset on foreign deferreds	(1,883)		(1.7)	%	270		0.3	%	1,183		1.4	%
Foreign tax deduction	(1,657)		(1.5)	%	—		—	%	—		—	%
Foreign valuation allowance	6,597		5.8	%	1,386		1.3	%	67		0.1	%
Other	(1,156)		(1.0)	%	201		0.2	%	514		0.6	%
Total	$	29,929	26.2	%	$	20,874	20.1	%	$	14,420	17.2	%

Significant deferred tax assets (liabilities) follow (in thousands):

	December 29, 2024		December 31, 2023
Accrued liabilities	$	12,660	$	12,735
Accrued bonuses	3,148		2,284
Other liabilities and asset reserves	15,536		15,315
Equity awards	7,542		7,988
Lease liabilities	50,500		45,550
Other	5,616		2,825
Net operating losses	18,028		13,759
Foreign tax credit carryforwards	23,071		23,888
Total deferred tax assets	136,101		124,344
Valuation allowances	(44,463)		(37,609)
Total deferred tax assets, net of valuation allowances	91,638		86,735
Deferred expenses	(6,470)		(5,719)
Accelerated depreciation	(19,144)		(23,012)
Goodwill	(8,090)		(7,881)
Right-of-use assets	(45,803)		(41,513)
Other	(1,384)		(1,071)
Total deferred tax liabilities	(80,891)		(79,196)
Net deferred tax assets	$	10,747	$	7,539

The following table summarizes changes in the Company’s valuation allowances on deferred tax (in thousands):

Balance at December 25, 2022	$	32,052
Charged to costs and expenses	5,470
Other	87
Balance at December 31, 2023	$	37,609
Charged to costs and expenses	6,642
Other	212
Balance at December 29, 2024	$	44,463

The Company had approximately $11.7 million and $10.3 million of state deferred tax assets in separate company jurisdictions primarily related to state net operating loss carryforwards as of December 29, 2024 and December 31, 2023, respectively. Our ability to utilize these state deferred tax assets is dependent on our ability to generate earnings in future years in the respective state jurisdictions. The Company provided a full valuation allowance of $11.7 million and $10.3 million for these state deferred tax assets as we believe realization based on the more-likely-than-not criteria has not been met as of December 29, 2024 and December 31, 2023, respectively.

The Company had approximately $3.8 million and $3.0 million of state deferred tax assets related to state income tax credit carryforwards as of December 29, 2024 and December 31, 2023, respectively. Our ability to fully utilize these deferred tax assets related to state income tax credit carryforwards is dependent on our ability to generate earnings in future years in the respective state jurisdictions. The Company provided a partial valuation allowance of $0.5 million and $0.7 million against these state deferred tax assets at December 29, 2024 and December 31, 2023, respectively. We believe that a portion of these state income tax credit carryforwards would not be realizable before expiration.

The Company had approximately $9.2 million and $4.6 million of foreign net operating loss, capital loss carryovers and foreign deferred tax assets as of December 29, 2024 and December 31, 2023, respectively. The Company had approximately $9.2 million and $2.7 million of valuation allowances primarily related to the foreign net operating losses,

foreign capital losses and foreign deferred tax assets at both December 29, 2024 and December 31, 2023. A substantial majority of our foreign net operating losses do not have an expiration date.

In addition, the Company had approximately $23.1 million and $23.9 million in foreign tax credit carryforwards as of December 29, 2024 and December 31, 2023, respectively, that expire ten years from inception in years 2028 through 2034. Our ability to utilize these foreign tax credit carryforwards is dependent on our ability to generate foreign earnings in future years sufficient to claim foreign tax credits in excess of foreign taxes paid in those years. The Company provided a full valuation allowance of $23.1 million and $23.9 million for these foreign tax credit carryforwards as we believe realization based on the more-likely-than-not criteria has not been met as of December 29, 2024 and December 31, 2023, respectively.

Cash for income taxes paid were $36.3 million in 2024, $12.5 million in 2023 and $11.7 million in 2022.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company, with few exceptions, is no longer subject to U.S. federal, state and local, or non-US income tax examinations by tax authorities for years before 2020. The Company is currently undergoing examinations by various tax authorities.

The Company had $1.3 million of unrecognized tax benefits at December 29, 2024 which, if recognized, would affect the effective tax rate. A reconciliation of the beginning and ending liability for unrecognized tax benefits excluding interest and penalties is as follows, which is recorded in Other long-term liabilities in the Consolidated Balance Sheets (in thousands):

Balance at December 25, 2022	$	1,162
Additions for tax positions of prior years	217
Reductions for tax positions of prior years	(321)
Balance at December 31, 2023	$	1,058
Additions for tax positions of prior years	276
Reductions for tax positions of prior years	(45)
Balance at December 29, 2024	$	1,289

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. The Company has accrued approximately $0.2 million for the payment of interest and penalties as of December 29, 2024 and December 31, 2023.