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Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312510040721/d10k.htm[9/11/2014 10:09:50 AM]
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
13. INCOME TAXES
Utilization of our net operating loss (“NOL”) carryforwards reduced our federal and state income tax liability incurred. As of December 29,
2009, we had $1.0 million of our federal and state income tax overpayments within prepaid expenses on our balance sheet. The provision for
income taxes consists of the following:
January 1,
2008
December 30,
2008
December 29,
2009
(in thousands)
Current
Federal $ 232 $ 359 $—
State 222 741 198
Total current income tax provision 454 1,100 198
Deferred
Federal 4,957 9,194 808
State 1,132 971 6,755
Total deferred income tax benefit 6,089 10,165 7,563
Change in valuation allowance (6,089) (10,165) (60,953)
Total deferred income tax benefit — — (53,390)
Total income tax provision (benefit) $ 454 $ 1,100 $ (53,192)
We continuously assess the likelihood of realization of the benefits of our deferred tax assets. We consider many qualitative and quantitative
factors, including:
• The level of our historical taxable income and projections of our future taxable income over periods in which the deferred tax assets
would be deductible;
• accumulation of our income (loss) before taxes utilizing a look-back period of at least three fiscal years;
• events within the restaurant industry;
• the cyclical nature of our business;
• the health of the economy;
• our future forecasts of taxable income; and
• historical trending.
In the fourth quarter of 2008, after consideration of this qualitative and quantitative data, we concluded not to reduce our valuation allowance
because of the existing recessionary macroeconomic climate and the uncertainty around credit markets and consumer behavior.
In the third quarter of 2009, after again assessing the existing qualitative and quantitative data, including the wide-spread consensus that the
economic climate was beginning to improve, we reduced our $65.9 million valuation allowance by $61 million to $4.9 million after consideration
the following factors:
• Our continued profitability through September 29, 2009 resulting in nine consecutive quarters of pretax profitability;
66
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
• our cumulative income before taxes of $41.5 million over the last fifteen quarters through September 29, 2009;
• our cumulative income from operations of $94.7 million over the last fifteen quarters through September 29, 2009; and