Buffalo Wild Wings 2008 Annual Report Download - page 51

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51
BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 28, 2008 and December 30, 2007
(Dollar amounts in thousands, except per-share amounts)
In 2008, 2007, and 2006, 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 28,
2008
December 30,
2007
December 31,
2006
Minimum rents $ 21,714 $ 16,729 $ 14,600
Percentage rents 308 250 238
Total $ 22,022 $ 16,979 $ 14,838
Equipment and auto leases $ 356 $ 359 $ 273
(6) Derivative Instruments
We use commodities derivatives to manage our exposure to commodity price fluctuations. During fiscal 2008, we
entered into options and future contracts to reduce our risk of natural gas price fluctuations. These derivatives do not qualify
for hedge accounting and changes in fair value are included in current net income. These changes are classified as a
component of restaurant operating expenses. Net losses of $592 and $25 were recognized in fiscal 2008 and 2007,
respectively. As of December 28, 2008, the maximum length of time over which we are hedging our exposure to the
variability in future cash flows related to the purchase of natural gas is ten months.
(7) Income Taxes
We file a consolidated return in the United States Federal jurisdiction and in many state jurisdictions. The Internal
Revenue Service completed their examination of our 2005 U.S. Federal Income Tax Return in 2008. 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
statutes of limitations prior to December 27, 2009. The provision for income taxes consisted of the following:
Fiscal Years Ended
December 28,
2008
December 30,
2007
December 31,
2006
Current:
Federal $ 4,082 $ 8,320 $ 8,801
State 1,525 1,438 992
Deferred:
Federal 6,125 (869) (1,705)
State 197 (25) (523)
Total income tax expense $ 11,929 $ 8,864 $ 7,565