Einstein Bros 2009 Annual Report Download - page 54

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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]
Series Z additional redemption
0.0%
0.0%
2.8%
Other, net 3.2% 4.2% 0.2%
Deferred taxes related to change in tax accounting method 18.6% 0.0% 0.0%
Expired tax carryforwards 8.7% 0.0% 0.0%
Effect of change in tax rate -24.2% 5.4% -0.9%
50.2% 50.8% 41.3%
Change in valuation allowance -46.7% -45.8% -324.2%
Effective income tax rate 3.5% 5.0% -282.9%
Excess tax benefits related to stock option exercises were not recorded for each of the three years ended December 29, 2009, due to our NOL
carryforward position. The following represents a reconciliation of our unrecognized tax benefits for the year ended December 29, 2009:
Unrecognized
tax benefits
(in thousands)
Balance - December 30, 2008 $ 3,384
Additions based on 2009 stock option exercises 1,692
Balance - December 29, 2009 $ 5,076
68
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
If the $5.1 million of unrecognized tax benefits currently not recognized on our balance sheet is recognized in the future, the entire balance
will impact our effective tax rate.
We record deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and
liabilities using the enacted statutory tax rate in effect for the year differences are expected to be taxable or refunded. Deferred income tax
expenses or credits are based on the changes in the asset or liability from period to period.
The Company’ s total deferred tax assets and liabilities are as follows:
December 30,
2008
December 29,
2009
(in thousands)
Deferred tax assets $ 67,381 $ 58,712
Deferred tax liabilities (1,433) (413)
65,948 58,299
Valuation allowance (65,948) (4,909)
Total deferred tax assets, net $— $ 53,390
Approximately $3.4 million and $5.1 million in 2008 and 2009, respectively, of the gross federal net operating losses are not included in the
deferred tax asset due to the limitation regarding recognition of this tax benefit. The income tax effects of temporary differences that give rise to
significant portions of deferred tax assets and liabilities are as follows:
December 30,
2008
December 29,
2009
(in thousands)
Current deferred tax assets and liabilities, net
Operating loss carryforwards $— $ 7,644
California wage and hour settlements 743 —
Senior management transition costs 326 72
Allowances for doubtful accounts 85 57
Deferred revenue — 29
Accrued expenses (404) 43
Total gross current deferred tax assets, net of liabilities 750 7,845
Valuation allowance (750) (661)
Total current deferred tax assets, net — 7,184
Long-term deferred tax assets and liabilities, net