Cracker Barrel 2008 Annual Report Download - page 74

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stock options were forfeited upon the completion of the
Logan’s divestiture. In accordance with SFAS No. 123R, the
previously accrued compensation cost for these awards were
reversed and no compensation cost was recorded for these
awards. Total compensation cost reversed related to these
awards was approximately $101 for stock options and $559
for nonvested stock awards and is recorded as discontinued
operations in the Consolidated Financial Statements. The
cash replacement awards for the 2005 and 2006 MTIRP
awards retained their original vesting terms. The cash
replacement awards of the nonvested stock grants retained
their original vesting terms and vest on various dates
between August 2007 and February 2011. Compensation
cost for these modified awards will be recognized by
Logan’s over the remaining vesting period of the awards.
During 2007, the Company also recognized additional
compensation expense of $1,731 for retirement eligible
employees under its MTIRP plans. In accordance with SFAS
No. 123R, compensation expense is recognized to the date
on which retirement eligibility is achieved, if shorter than
the vesting period.
11 LITIGATION SETTLEMENT
The Company was a member of a plaintiff class of a settled
lawsuit against Visa U.S.A. Inc. (“Visa”) and MasterCard
International Incorporated (“MasterCard”). The Visa
Check/Mastermoney Antitrust litigation settlement became
final on June 1, 2005. Because the Company believed this
settlement represented an indeterminate mix of loss
recovery and gain contingency, the Company could not
record the expected settlement proceeds until the
settlement amount and timing were reasonably certain.
During the second quarter of 2007, the Company received
its share of the proceeds, which was $1,318, and recorded
the amount of the proceeds as a gain that is included in
other store operating expenses in the Consolidated
Statement of Income.
12 INCOME TAXES
Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.
Significant components of the Company’s net deferred
tax liability consisted of the following at:
August 1, August 3,
2008 2007
Deferred tax assets:
Financial accruals without economic
performance $ 57,155 $ 37,326
Other 5,985 6,864
Deferred tax assets $ 63,140 $ 44,190
Deferred tax liabilities
Excess tax depreciation over book $ 75,213 $ 72,202
Other 24,182 21,868
Deferred tax liabilities 99,395 94,070
Net deferred tax liability $ 36,255 $ 49,880
The Company provided no valuation allowance against
deferred tax assets recorded as of August 1, 2008 and
August 3, 2007, as the “more-likely-than-not” valuation
method determined all deferred assets to be fully realizable
in future taxable periods.
The components of the provision for income taxes
from continuing operations for each of the three years were
as follows:
2008 2007 2006
Current:
Federal $23,536 $ 46,883 $49,130
State 1,789 7,824 4,194
Deferred:
Federal 1,565 (14,250) (6,815)
State 1,322 41 (1,655)
Total income tax provision $28,212 $ 40,498 $44,854
A reconciliation of the provision for income taxes from
continuing operations and the amount computed by
multiplying the income before the provision for income
taxes by the U.S. federal statutory rate of 35% was as
follows:
2008 2007 2006
Provision computed at federal
statutory income tax rate $32,730 $40,768 $49,124
State and local income taxes,
net of federal benefit 2,992 6,143 3,202
Employer tax credits for
FICA taxes paid on employee
tip income (5,846) (5,449) (4,761)
Federal reserve adjustments — 168 (1,332)
Other employer tax credits (2,994) (3,915) (2,219)
Section 162(m) non-deductible
compensation — 1,809 —
Other-net 1,330 974 840
Total income tax provision $28,212 $40,498 $44,854