Cracker Barrel 2005 Annual Report Download - page 63

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The components of the provision for income taxes
for each of the three years were as follows:
2005 2004 2003
Current:
Federal $49,768 $44,006 $17,214
State 3,875 4,273 1,483
Deferred:
Federal 11,069 13,172 36,113
State 2,213 1,212 3,141
Total income tax provision $66,925 $62,663 $57,951
A reconciliation of the provision for income taxes
and the amount computed by multiplying the income
before the provision for income taxes by the U.S.
federal statutory rate of 35% was as follows:
2005 2004 2003
Provision computed at federal
statutory income tax rate $67,748 $61,092 $57,071
State and local income taxes,
net of federal benefit 5,896 5,578 4,399
Employer tax credits for
FICA taxes paid on
employee tip income (5,334) (4,781) (4,323)
Other-net (1,385) 774 804
Total income tax provision $66,925 $62,663 $57,951
9SEGMENT INFORMATION
Cracker Barrel units represent a single, integrated
operation with two related and substantially integrated
product lines. The operating expenses of the restau-
rant and retail product lines of a Cracker Barrel unit
are shared and are indistinguishable in many respects.
Likewise, Logan’s units are restaurant operations
with investment criteria and economic and operating
characteristics similar to those of Cracker Barrel.
The chief operating decision makers regularly evaluate
the Cracker Barrel and Logan’s restaurant and retail
components in determining how to allocate resources
and in assessing performance. Accordingly, the
Company manages its business on the basis of one
reportable operating segment. All of the Company’s
operations are located within the United States. The
following data are presented in accordance with
SFAS No. 131 for all periods presented.
2005 2004 2003
Net sales in company-owned stores:
Restaurant $2,071,011 $1,892,487 $1,753,361
Retail 494,160 486,433 443,397
Total net sales 2,565,171 2,378,920 2,196,758
Franchise fees and
royalties 2,377 2,027 1,424
Total revenue $2,567,548 $2,380,947 $2,198,182
10 COMMITMENTS AND CONTINGENCIES
As reported in the 2004 Form 10-K/A, Cracker Barrel
agreed in principle, as of September 8, 2004, to
settle certain litigation (five separate cases) alleging
violations of the Fair Labor Standards Act (“FLSA”),
as well as allegations of discrimination in employment
and public accommodations. Four of those cases
have been settled and dismissed. In the fifth case (an
FLSA collective action with approximately 10,000
plaintiffs), settlement reflecting the agreement in
principle reached in August 2004 is still awaiting
court approval. On May 27, 2005, a joint motion by
the Company and the plaintiffs seeking approval of
the settlement was filed with the court. This filing set
in motion the final approval process, which the
Company expects will be concluded (with final approval
granted) on or before October 18, 2005. Of the total
payment agreed to by Cracker Barrel to settle the five
cases, approximately $2,250 related to the fifth
case is still accrued and expected to be paid on or
before December 31, 2005.
The Company and its subsidiaries are parties to
other legal proceedings incidental to its business. In
the opinion of management, based upon information
currently available, the ultimate liability with respect
to these other actions will not materially affect the
Company’s Consolidated Financial Statements.
The Company makes trade commitments in the
course of its normal operations. As of July 29, 2005
the Company was contingently liable for approximately
$4,343 under outstanding trade letters of credit
issued in connection with purchase commitments.
These letters of credit have terms of three months or
less and are used to collateralize obligations to third
parties for the purchase of a portion of the Company’s
imported retail inventories. Additionally, the Company
was contingently liable pursuant to standby letters of
credit as credit guarantees to insurers. As of July 29,
2005, the Company had $32,436 of standby letters
of credit related to workers’ compensation, commercial
general liability insurance and retail purchases. All
standby letters of credit are renewable annually.
The Company is secondarily liable for lease payments
under the terms of an operating lease that has been
assigned to a third party. The operating lease has a
remaining life of approximately 8.2 years with annual
lease payments of $361. The Company’s performance
is required only if the assignee fails to perform the