Panera Bread 2015 Annual Report Download - page 76

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PANERA BREAD COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
66
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 29,
2015
December 30,
2014
Deferred tax assets:
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,360 $ 72,891
Foreign net operating loss carryforward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,938 4,178
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,705 3,125
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,160 1,701
Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,299)(4,625)
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 81,864 $ 77,270
Deferred tax liabilities:
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(92,580)$ (101,533)
Goodwill and other intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (25,252)(23,705)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(117,832)$ (125,238)
Net deferred tax liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(35,968)$ (47,968)
Current deferred income tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,479 $ 28,621
Long-term deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(70,447)$ (76,589)
In assessing the realization of deferred tax assets, the Company considers the generation of future taxable income and utilizes a
more likely than not standard to determine if deferred tax assets will be realized. Based on this assessment, the Company has
recorded a valuation allowance of $5.3 million and $4.6 million as of December 29, 2015 and December 30, 2014, respectively,
as a full valuation allowance against all Canadian deferred tax assets, including the net operating loss carryforwards of the
Company's Canadian operations. The Company’s Canadian net operating loss carryforwards begin expiring in 2027.
As of both December 29, 2015 and December 30, 2014, the amount of unrecognized tax benefits that, if recognized in full, would
be recorded as a reduction of income tax expense was $6.1 million, inclusive of applicable interest and penalties and net of federal
tax benefits, respectively. 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 Income. These amounts were income of $0.2 million, expense of $0.3
million, and income of $0.1 million during fiscal 2015, fiscal 2014, and fiscal 2013, respectively. Accrued interest and penalties
were $0.9 million and $1.4 million as of December 29, 2015 and December 30, 2014, respectively.
The following is a rollforward of the Company’s liability for unrecognized tax benefits for the periods indicated (in thousands):
December 29,
2015
December 30,
2014
December 31,
2013
Beginning balance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,455 $ 2,999 $ 3,051
Tax positions related to the current year:
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,339 1,536 653
Tax positions related to prior years:
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,671 256
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (483)—(49)
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (200)(131)(425)
Expiration of statutes of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (443)(620)(487)
Ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,668 $ 6,455 $ 2,999
The U.S. Internal Revenue Service has completed exams of the Company’s U.S. federal tax returns for fiscal years 2012 and prior.
While certain state returns in fiscal years 2002 through 2011 may be subject to future assessment by taxing authorities, the Company
is no longer subject to examination in Canada and most states in fiscal years prior to 2012.