Popeye's 2013 Annual Report Download - page 86

Popeyes Louisiana Kitchen, Inc.
Notes to Consolidated Financial Statements
For Fiscal Years 2013, 2012, and 2011 — (Continued)
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At December 29, 2013,the Company had state net operating losses (“NOLs”) of approximately $122 million which
expire between 2017 and 2028. The Company established a full valuation allowance on the deferred tax asset related
to these NOLs as it is more likely than not that such tax benefit will not be realized. As such, the Company has established
avaluation allowance of approximately $6.3 million at December 29, 2013 and $5.9 million at December 30, 2012.
The amount of unrecognized tax benefits were approximately $1.4 million as of December 29, 2013 of which
approximately $0.2 million,if recognized, would impact the effective income tax rate. A reconciliation of the beginning
and ending amount of unrecognized tax benefits as of December 29, 2013 is as follows:
(in millions) 2013 2012 2011
Balance, beginning of year $ 1.3 $2.2 $2.1
Additions related to current year 0.1 —0.2
Reductions related to prior years — (0.8) —
Reductions due to statute expiration —(0.1)(0.1)
Balance, end of year $ 1.4 $1.3 $2.2
The Company recognizes interest and penalties related to uncertain tax positions as a component of its income tax
expense. Interest and penalties on uncertain tax positions for the fiscal years 2013, 2012 and 2011 were not significant.
The Company had approximately $0.1 million of accrued interest and penalties related to uncertain tax positions as of
December 29, 2013 and December 30, 2012.
Unrecognized tax benefits and accrued interest and penalties are reported as a component of deferred credits and
other long-term liabilities.
The Company files income tax returns in the United States and various state jurisdictions. The U.S. federal tax years
2010 through 2012 are open to audit. In general, the state tax years open to audit range from 2009 through 2012.
Note 19 — Components of Earnings Per Share Computation
(in millions) 2013 2012 2011
Net income $ 34.1 $30.4 $24.2
Denominator for basic earnings per share — weighted average shares 23.6 23.9 24.5
Dilutive employee stock options 0.5 0.6 0.5
Denominator for diluted earnings per share 24.1 24.5 25.0
The Company’sbasic earnings per share calculation is computed based on the weighted-average number of common
shares outstanding. Diluted earnings per share calculation is computed based on the weighted-average number of
common shares outstanding adjusted by the number of additional shares that would have been outstanding had the
potentially dilutive common shares been issued. Potentially dilutive common shares include employee stock options,
outstanding restricted stock awards and unvested restricted share units. Performance based awards are included in the
average diluted shares outstanding each period if the performance criteria have been met at the end of the respective
periods.
Potentially dilutive shares are excluded from the diluted earnings per share computation in periods in which they
have an anti-dilutive effect. The weighted average number of shares subject to antidilutive options were not significant
for the fiscal year 2013 and 2012. The weighted average number of shares subject to antidilutive options were 0.1
million for fiscal year 2011.