Buffalo Wild Wings 2008 Annual Report Download - page 52

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52
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)
A reconciliation of the expected federal income taxes (benefits) at the statutory rate of 35% to the actual provision for
income taxes is as follows:
Fiscal Years Ended
December 28,
2008
December 30,
2007
December 31,
2006
Expected federal income tax expense $ 12,728 $ 9,981 8,343
State income tax expense, net of federal effect 1,119 919 305
Nondeductible expenses 116 144 115
Tax exempt income (430) (824) (602)
General business credits (1,752) (1,121) (772)
Other, net 148 (235) 176
Total income tax expense $ 11,929 $ 8,864 7,565
Deferred tax assets and liabilities are classified as current and noncurrent on the basis of the classification of the related
asset or liability for financial reporting. Deferred income taxes are provided for temporary differences between the basis of
assets and liabilities for financial reporting purposes and income tax purposes. Temporary differences comprising the net
deferred tax assets and liabilities on the balance sheets are as follows:
Fiscal Years Ended
December 28,
2008
December 30,
2007
Deferred tax assets:
Unearned franchise fees $ 974 $ 880
Accrued vacation 314 264
Accrued compensation 715 600
Deferred lease credits 1,716 1,262
Restricted stock units 404 —
Other 472 484
$ 4,595 $ 3,490
Deferred tax liability:
Depreciation $ 11,780 $ 4,353
Total $ 11,780 $ 4,353
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:
Balance at December 30, 2007 $ 241
Additions based on tax positions related to the current year 133
Additions for tax positions of prior years 68
Balance at December 28, 2008 $ 442
We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense.
During 2008, interest and penalties of $26 were included in income tax expense. Interest and penalties related to
unrecognized tax benefits totaled $88 at December 30, 2007 and $114 at December 28, 2008. Included in the balance at
December 30, 2007 and December 28, 2008, are unrecognized tax benefits of $157 and $287, respectively, which if
recognized, would affect the annual effective tax rate. The difference between these amounts and the amount reflected in the
reconciliation above relates to the deferred U.S. federal income tax benefit on unrecognized tax benefits related to U.S. state
income taxes.