Buffalo Wild Wings 2006 Annual Report Download - page 22

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Self-Insurance Liability
We are self-insured for a significant portion of our risks and associated liabilities with respect to workers’
compensation, general liability, and employee health benefits. The accrued liabilities associated with these programs are
based on our estimate of the ultimate costs to settle known claims as well as claims that may have arisen but have not yet
been reported to us as of the balance sheet date. Our estimated liabilities are not discounted and are based on information
provided by our insurance brokers and insurers, combined with our judgments regarding a number of assumptions and
factors, including the frequency and severity of claims, and claims development history. We maintain stop-loss coverage with
third-party insurers to limit our total exposure for each of these programs. Significant judgment is required to estimate claims
incurred but not reported as parties have yet to assert such claims. If actual claims trends, including the frequency or severity
of claims, differ from our estimates, our financial results could be impacted.
Results of Operations
Our operating results for 2006, 2005, and 2004 are expressed as a percentage of total revenue below, except for the
components of restaurant operating costs, which are expressed as a percentage of restaurant sales.
Fiscal Years Ended
Dec. 3 1,
2006
Dec. 2 5,
2005
Dec. 2 6,
2004
Revenue:
Restaurant sales 88.8% 88.6% 89.0%
Franchising royalties and fees 11.2 11.4 11.0
Total revenue 100.0 100.0 100.0
Costs and expenses:
Restaurant operating costs:
Cost of sales 30.8 31.6 33.8
Labor 29.5 29.8 28.8
Operating 16.6 16.0 15.2
Occupancy 7.1 7.6 6.7
Depreciation 5.2 5.6 5.7
General and administrative 10.9 10.6 11.3
Preopening 1.1 1.2 1.2
Restaurant impairment and closures 0.4 0.9 0.3
Total costs and expenses 92.3 93.8 93.8
Income from operations 7.7 6.2 6.2
Interest income 0.8 0.6 0.4
Earnings before income taxes 8.6 6.8 6.6
Income tax expense 2.7 2.6 2.4
Net earnings 5.8% 4.2% 4.2%
The number of company-owned and franchised restaurants open are as follows:
As of
Dec. 31,
2006
Dec. 25,
2005
Dec. 2 6,
2004
Company-owned restaurants 139 122 103
Franchised restaurants 290 248 203
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