Cracker Barrel 2008 Annual Report Download - page 75

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As a result of the adoption of FIN 48, the Company
recognized a liability for uncertain tax positions of $23,866
and related federal tax benefits of $7,895, which resulted
in a net liability for uncertain tax positions of $15,971. As
required by FIN 48, the liability for uncertain tax positions
has been included in other long-term obligations and the
related federal tax benefits have reduced long-term deferred
income taxes. In the prior year, the liability for uncertain
tax positions (net of the related federal tax benefits) was
included in income taxes payable. The cumulative effect of
this change in accounting principle upon adoption resulted
in a net increase of $2,898 to the Company’s beginning
2008 retained earnings.
As of August 1, 2008, the Company’s liability for
uncertain tax positions was $26,602 ($17,753, net of
related federal tax benefits of $8,849).
Summarized below is a tabular reconciliation of the
beginning and ending balance of the Company’s total gross
liability for uncertain tax positions exclusive of interest and
penalties:
Balance at August 4, 2007 $21,338
Tax positions related to the current year:
Additions 3,857
Reductions —
Tax positions related to prior years:
Additions 1,342
Reductions (995)
Settlements —
Expiration of statute of limitations (2,663)
Balance at August 1, 2008 $22,879
The Company recognizes, net of tax, interest and
estimated penalties related to uncertain tax positions in its
provision for income taxes. At August 1, 2008 and August 4,
2007, the Company’s liability for uncertain tax positions
included $2,790 and $2,010, respectively, net of tax for
potential interest and penalties.
At August 1, 2008 and August 4, 2007, the amount of
uncertain tax positions that, if recognized, would affect the
effective tax rate is $17,753 and $15,971, respectively.
In many cases, the Company’s uncertain tax positions
are related to tax years that remain subject to examination
by the relevant taxing authorities. Based on the outcome of
these examinations or as a result of the expiration of the
statutes of limitations for specific taxing jurisdictions, the
related uncertain tax positions taken regarding previously
filed tax returns could decrease from those recorded as
liabilities for uncertain tax positions in the Company’s
financial statements at August 1, 2008 by approximately
$3,400 to $4,000 within the next twelve months.
At August 1, 2008, the Company was subject to
income tax examinations for its U.S. federal income taxes
after 2004 and for state and local income taxes generally
after 2004.
13 SEGMENT INFORMATION
Cracker Barrel units represent a single, integrated operation
with two related and substantially integrated product
lines. The operating expenses of the restaurant and retail
product lines of a Cracker Barrel unit are shared and
are indistinguishable in many respects. Accordingly, the
Company manages its business on the basis of one
reportable operating segment. All of the Company’s
operations are located within the United States. As stated
in Note 3, the operations of Logan’s are reported
as discontinued operations and have been excluded from
segment reporting. The following data are presented in
accordance with SFAS No. 131 for all periods presented.
2008 2007 2006
Revenue from continuing
operations:
Restaurant $1,872,152 $1,844,804 $1,748,193
Retail 512,369 506,772 471,282
Total revenue from
continuing operations $2,384,521 $2,351,576 $2,219,475
14 COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries are parties to various
legal and regulatory proceedings and claims incidental to
and arising out of the ordinary course of its business. In
the opinion of management, however, based upon
information currently available, the ultimate liability with
respect to these other proceedings and claims will not
materially affect the Company’s consolidated results of
operations or financial position.
The Company is contingently liable pursuant to standby
letters of credit as credit guarantees related to insurers.
As of August 1, 2008, the Company had $29,062 of standby
letters of credit related to securing reserved claims under