Buffalo Wild Wings 2007 Annual Report Download - page 46

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46
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 30, 2007 and December 31, 2006
(Dollar amounts in thousands, except per-share amounts)
In 2007, 2006, and 2005, we rented office space under operating leases which, in addition to the minimum lease
payments, require payment of a proportionate share of the real estate taxes and building operating expenses. We also rent
restaurant space under operating leases, some of which, in addition to the minimum lease payments and proportionate share
of real estate and operating expenses, require payment of percentage rents based upon sales levels. Rent expense, excluding
our proportionate share of real estate taxes and building operating expenses, was as follows:
Fiscal Years Ended
December 30,
2007
December 31,
2006
December 25,
2005
Minimum rents $ 16,729 14,600 11,702
Percentage rents 250 238 170
Total $ 16,979 14,838 11,872
Equipment and auto leases $ 359 273 218
(5) Income Taxes
We adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN 48), on
January 1, 2007 and upon adoption did not need to recognize an adjustment in the previously recorded liability for
unrecognized income tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as
follows:
(in millions)
Balance at January 1, 2007 $ 419
Additions based on tax positions related to the current year 88
Reductions for tax positions of prior years (204)
Settlements (62)
Balance at December 30, 2007 $ 241
We recognize potential accrued interest and penalties related to unrecognized tax benefits within its operations in
income tax expense. Interest and penalties related to unrecognized tax benefits totaled $146 at January 1, 2007. Included in
the balance at January 1, 2007 and December 30, 2007, are unrecognized tax benefits of $337 and $157, respectively, which
if recognized, would affect the annual effective tax rate. The difference between these amounts and the amount reflected in
the tabular reconciliation above relates to the deferred U.S. federal income tax benefit on unrecognized tax benefits related to
U.S. state income taxes.
We file a consolidated return in the United States Federal jurisdiction and in many state jurisdictions. The Internal
Revenue Service has completed their examination of our 2005 U.S. Federal Income Tax Return. No proposed changes were
made. With few exceptions, we are no longer subject to state income tax examinations for years before 2004. We do not
anticipate that total unrecognized tax benefits will significantly change due to the settlement of audits and the expiration of
statute of limitations prior to December 28, 2008. Income tax expense (benefit) is comprised of the following:
Fiscal Years Ended
December 30,
2007
December 31,
2006
December 25,
2005
Current:
Federal $ 8,320 8,801 5,400
State 1,438 992 1,512
Deferred:
Federal (869) (1,705) (1,287)
State (25) (523) (186)
Total income tax expense $ 8,864 7,565 5,439