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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
60
The tax effects of the significant temporary differences which comprise the deferred tax assets and liabilities were as follows for
the periods indicated (in thousands):
December 25,
2012 December 27,
2011
Deferred tax assets:
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,198 $ 70,996
Stock-based compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,002 3,204
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,900 245
Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,761) —
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 81,339 $ 74,445
Deferred tax liabilities:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(88,590) $ (62,812)
Goodwill and other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19,902)(18,452)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(108,492) $ (81,264)
Net deferred tax liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(27,153) $ (6,819)
Net deferred current tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 33,502 $ 27,526
Net deferred non-current tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(60,655) $ (34,345)
In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that the deferred tax
assets will be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income. The
deferred tax valuation allowance of $1.8 million as of December 25, 2012 is attributable to net operating loss carryforwards of
the Company's Canadian operations which are not realizable on a more likely than not basis.
The following is a rollforward of the Company’s total gross unrecognized tax benefit liabilities for the periods indicated (in
thousands):
December 25,
2012 December 27,
2011 December 28,
2010
Beginning balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,544 $ 2,896 $ 3,357
Tax positions related to the current year:
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530 526 477
Tax positions related to prior years:
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 264 724
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (341)(142)(700)
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58) — (373)
Expiration of statutes of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (841) — (589)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,051 $ 3,544 $ 2,896
As of December 25, 2012 and December 27, 2011, the amount of unrecognized tax benefits that, if recognized in full, would be
recorded as a reduction of income tax expense was $2.9 million and $3.4 million, net of federal tax benefits and applicable interest
and penalties, respectively. In certain cases, the Company’s uncertain tax positions are related to tax years that remain subject to
examination by the relevant tax authorities. Tax returns in the Company’s major tax filing jurisdictions for years after 2008, as
well as certain federal and state returns in 2002 thru 2008 may be subject to future examination by tax authorities. Estimated
interest and penalties related to the underpayment of income taxes are classified as a component of income tax expense in the
Consolidated Statements of Comprehensive Income and were $0.2 million during fiscal 2012 and $0.3 million during fiscal 2011
and fiscal 2010, respectively. Accrued interest and penalties were $1.1 million and $1.3 million as of December 25, 2012 and
December 27, 2011, respectively.