Panera Bread 2004 Annual Report Download - page 50

The Company is subject to legal proceedings and claims which arise in the normal course of business. In the opinion of
management, the ultimate liabilities with respect to these actions will not have a material adverse effect on the Company’s financial
position, results of operations, or cash flow.
11. Income Taxes
The provision for income taxes attributable to income before income taxes and cumulative effect of accounting change in the
consolidated statements of operations is comprised of the following (in thousands):
December 25,
2004
(as restated)
December 27,
2003
(as restated)
December 28,
2002
Current:
Federal ................................................................................................................................ $ 15,634 $ 1,421 $ —
State .................................................................................................................................... 647 550 253
16,281 1,971 253
Deferred:
Federal ................................................................................................................................ 5,802 15,383 11,405
State .................................................................................................................................... 92 412 584
5,894 15,795 11,989
Tax Provision ....................................................................................................................... 22,175 17,766 12,242
Tax benefit on cumulative effect .......................................................................................... — (137) —
$ 22,175 $ 17,629 $ 12,242
A reconciliation of the statutory federal income tax rate to the effective tax rate as a percentage of income before income taxes and
cumulative effect of accounting change attributable to income before cumulative effect of accounting change follows:
2004
(as restated)
2003
(as restated)
2002
Statutory rate provision ..................................................................................................................... 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit and other .................................................................... 1.5 1.5 1.5
36.5% 36.5% 36.5%
The tax effects of the significant temporary differences which comprise the deferred tax assets (liabilities) are as follows (in
thousands):
2004
(as restated)
2003
Current deferred tax assets:
Receivables reserve .......................................................................................................................................... $ 11 $ 19
Accrued expenses ............................................................................................................................................. 2,236 1,677
Total current asset.......................................................................................................................................... 2,247 1,696
Non-current deferred tax assets (liabilities):
Property, plant, and equipment......................................................................................................................... (4,908) (3,634)
Accrued expenses ............................................................................................................................................. 2,858 2,452
Goodwill ........................................................................................................................................................... (4,363) (3,365)
Tax credit carryforward .................................................................................................................................... — 3,598
Charitable contribution carryforward ............................................................................................................... 1,316 3,125
Capital loss carryforward.................................................................................................................................. — 2,292
Total non-current deferred tax asset (liability)............................................................................................... (5,097) 4,468
Valuation allowance....................................................................................................................................... (550) (3,571)
Total net non-current deferred tax asset (liability)......................................................................................... (5,647) 897
Total net deferred tax asset (liability)................................................................................................................. $ (3,400) $ 2,593
A valuation allowance is provided to reduce the deferred tax assets to a level which, more likely than not, will be realized. The
valuation allowance at December 25, 2004 is attributable to charitable contribution carryforwards which the Company may not be able
to utilize prior to their expiration. In addition to the charitable contribution carryforwards, the valuation allowance at December 27,
2003 is attributable to the potential for the non-deductibility of a capital loss carryforward related to the taxable loss on the sale of the
Au Bon Pain Division.
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