Buffalo Wild Wings 2012 Annual Report Download - page 52

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BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 30, 2012 and December 25, 2011
(Dollar amounts in thousands, except per-share amounts)
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 accompanying consolidated balance sheets are as follows:
December 30,
2012
December 25,
2011
Deferred tax assets:
Unearned revenue $ 919 982
Accrued compensation and benefits 3,570 2,956
Deferred lease credits 8,450 5,231
Stock-based compensation 2,362 2,727
Advertising costs 733 2,260
Foreign NOL/Other 2,470 875
Other 2,501 1,604
Total $ 21,005 16,635
Deferred tax liabilities:
Depreciation $ 48,423 46,354
Goodwill and other amortization 1,466 1,595
Future taxes on foreign earnings 2,470 875
Total $ 52,359 48,824
A valuation allowance is established when it is more likely than not that some portion of the deferred tax assets will not
be realized. Realization is dependent upon the generation of future taxable income or the reversal of deferred tax liabilities
during the periods in which those temporary differences become deductible. We consider the reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies. Since we believe sufficient future taxable income will
be generated to utilize the benefits of the deferred tax assets, a valuation allowance has not been recognized. Our foreign net
operating losses begin expiring in 2030.
The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:
Fiscal Years Ended
December 30,
2012
December 25,
2011
Beginning of year $ 732 $ 721
Additions based on tax positions related to the current year 179
165
Reductions based on tax positions related to prior years —
(21)
Reductions based on expiration of statute of limitations (129) (133)
End of year $ 782 $ 732
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. During fiscal
2012, 2011, and 2010, interest and penalties of ($5), ($18), and ($5), respectively, were included in income tax expense. As
of December 30, 2012, and December 25, 2011, interest and penalties related to unrecognized tax benefits totaled $68 and
$60, respectively. Included in the balance at December 30, 2012, and December 25, 2011, are unrecognized tax benefits of
$509 and $476, 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.
Our income tax returns are subject to examination in both the U.S., by federal, state and local jurisdictions, and in
Canada. With few exceptions, we are no longer subject to U.S. federal, state, or local examinations for years prior to fiscal
2009. The Canadian income tax returns are subject to review for fiscal years 2010 through 2012.