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Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312512092597/d260635d10k.htm[9/11/2014 10:08:30 AM]
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
14. INCOME TAXES
The components of the Company’ s income taxes (benefit) provision are as follows:
December 29,
2009
December 28,
2010
January 3,
2012
(in thousands)
Current
Federal $— $ (491) $—
State 198 685 1,040
Total current income tax provision 198 194 1,040
Deferred
Federal 6,755 8,162 5,866
State 808 1,700 1,033
Total deferred income tax provision 7,563 9,862 6,899
Change in valuation allowance (79,321) (138) 19
Total deferred income tax (benefit) provision (71,758) 9,724 6,918
Total income tax (benefit) provision $ (71,560) $ 9,918 $ 7,958
The Company’ s effective tax rate differs from the statutory tax rates as follows:
December 29,
2009
December 28,
2010
January 3,
2012
U.S. Federal statutory rate 35.0% 35.0% 35.0%
State income tax rate, net of Federal tax benefit 5.1% 6.6% 6.4%
Federal employment tax credits 0.0% 0.0% (2.2%)
Effect of change in tax rate (3.7%) 0.7% 0.0%
Series Z 2.8% 1.9% 0.0%
Other, net 2.1% 4.8% (1.6%)
41.3% 49.0% 37.6%
Change in valuation allowance (421.9%) (0.7%) 0.0%
Effective income tax rate (380.6%) 48.3% 37.6%
In the third quarter of 2009, the Company reduced the valuation allowance on its deferred tax assets by $79.3 million, taking into account the
following factors:
• the Company’ s continued profitability through September 29, 2009 resulted in nine consecutive quarters of pretax profitability;
• the Company’ s cumulative income before taxes of $41.5 million over the last fifteen quarters through September 29, 2009;
• the Company’ s cumulative income from operations of $94.7 million over the last fifteen quarters through September 29, 2009; and
• the Company received a favorable ruling from the Internal Revenue Service (“IRS”) on September 24, 2009 regarding its methodology
for determining ownership changes in accordance with Internal Revenue Code Section 382 (“IRC §382”).
76
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Company’ s total deferred tax assets and liabilities are as follows:
December 28,
2010
January 3,
2012
(in thousands)
Deferred tax assets $ 64,501 $ 60,258
Deferred tax liabilities (14,027) (16,652)