Buffalo Wild Wings 2007 Annual Report Download - page 47

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47
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 30, 2007 and December 31, 2006
(Dollar amounts in thousands, except per-share amounts)
A reconciliation of the expected federal income taxes (benefits) at the statutory rate of 35% to the actual provision for
income taxes is as follows:
Fiscal Years Ended
December 30,
2007
December 31,
2006
December 25,
2005
Expected federal income tax expense $ 9,981 8,343 5,012
State income tax expense, net of federal effect 919 305 862
Nondeductible expenses 144 115 80
Tax exempt income (824) (602) (350)
General business credits (1,121) (772) (528)
Statutory rate changes, deferred tax impact — — 148
Other, net (235) 176 215
Total income tax expense $ 8,864 7,565 5,439
Deferred tax assets and liabilities are classified as current and noncurrent on the basis of the classification of the related
asset or liability for financial reporting. Deferred income taxes are provided for temporary differences between the basis of
assets and liabilities for financial reporting purposes and income tax purposes. Temporary differences comprising the net
deferred tax assets and liabilities on the balance sheets are as follows:
Fiscal Years Ended
December 30,
2007
December 31,
2006
Deferred tax assets:
Unearned franchise fees $ 880 892
Accrued vacation 264 197
Accrued compensation 600 470
Deferred lease credits 1,262 1,029
Other 484 611
$ 3,490 3,199
Deferred tax liability:
Depreciation $ 4,353 4,956
Total $ 4,353 4,956
(6) Stockholders’ Equity
(a) Stock Options
We have 2.9 million shares of common stock reserved for issuance under the Equity Incentive Plan (the plan) for employees,
officers, and directors. The option price for shares issued under this plan is to be not less than the fair market value on the
date of grant with respect to incentive stock options, or 85% of fair market value for nonqualified stock options. Incentive
stock options become exercisable in four equal installments from the date of the grant and have a contractual life of ten years.
Nonqualified stock options issued pursuant to the plan have varying vesting periods from immediately to one year and have a
contractual life of ten years. We issue new shares of common stock upon exercise of stock options. In 2003, our shareholders
approved amendments to the plan to allow the granting of restricted stock and extended the plan to 2013. Option activity is
summarized as follows: