Papa Johns 2010 Annual Report Download - page 89

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82
13. Income Taxes (continued)
The reconciliation of income tax computed at the U.S. federal statutory rate to income tax expense for
the years ended December 26, 2010, December 27, 2009 and December 28, 2008 is as follows in both
dollars and as a percentage of income before income taxes ($ in thousands):
Income Tax
Expense
Income
Tax Rate
Income Tax
Expense
Income
Tax Rate
Income Tax
Expense
Income
Tax Rate
Tax at U.S. federal statutory rate 28,798$ 35.0% 31,568$ 35.0% 20,579$ 35.0%
State and local income taxes 1,896 2.3% 2,037 2.2% 1,507 2.6%
Foreign income taxes 1,171 1.4% 904 1.0% 810 1.4%
Settlement of certain tax issues (550) (0.7%) (1,238) (1.4%) (1,684) (2.9%)
Tax associated with
noncontrolling interests (1,297) (1.6%) (1,397) (1.5%) (753) (1.3%)
Non-qualified deferred compensation
plan (income) loss (434) (0.5%) (803) (0.9%) 1,235 2.1%
Tax credits and other (2,728) (3.3%) (2,086) (2.3%) (1,714) (2.9%)
Total
26,856
$
32.6%
28,985
$
32.1%
19,980
$
34.0%
2010 2009 2008
Income taxes paid were $21.7 million in 2010, $24.8 million in 2009 and $23.9 million in 2008.
The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign
jurisdictions. The Company, with few exceptions, is no longer subject to U.S. federal, state and local, or
non-U.S. income tax examinations by tax authorities for years before 2006. The Company is currently
undergoing examinations by various tax authorities. The Company anticipates that the finalization of
these current examinations and other issues could result in a decrease in the liability for unrecognized tax
benefits (and a decrease of income tax expense) of approximately $334,000 during the next 12 months.
A reconciliation of the beginning and ending liability for unrecognized tax benefits is as follows (in
thousands):
Balance at December 28, 2008 4,203$
Additions for tax positions of prior years 150
Reductions for lapse of statute of limitations (758)
Balance at December 27, 2009 3,595$
Reductions for lapse of statute of limitations (264)
Balance at December 26, 2010 3,331$
The Company recognizes interest accrued and penalties related to unrecognized tax benefits as a part of
income tax expense. The Company’s 2010 and 2009 income tax expense includes interest benefits of
$145,000 and $19,000, respectively. The Company has accrued approximately $1.4 million and $1.5
million for the payment of interest and penalties as of December 26, 2010 and December 27, 2009,
respectively.