Note 11 - Commitments and Contingencies
|12 Months Ended|
Dec. 25, 2016
|Notes to Financial Statements|
|Commitments and Contingencies Disclosure [Text Block]||
(11)Commitments and Contingencies
The Company is subject to various claims, possible legal actions and other matters arising in the normal course of business. Management does not expect disposition of these other matters to have a material adverse effect on the financial position, results of operations or liquidity of the Company. The Company expenses legal fees as incurred.
The legislation and regulations related to tax and unclaimed property matters are complex and subject to varying interpretations by both government authorities and taxpayers. The Company remits a variety of taxes and fees to various governmental authorities, including excise taxes, property taxes, sales and use taxes, and payroll taxes. The taxes and fees remitted by the Company are subject to review and audit by the applicable governmental authorities which could assert claims for additional assessments. Although management believes that the tax positions are reasonable and consequently there are no accrued liabilities for claims which
maybe asserted, various taxing authorities
maychallenge certain of the positions taken by the Company which
mayresult in additional liability for taxes and interest. These tax positions are reviewed periodically based on the availability of new information, the lapsing of applicable statutes of limitations, the conclusion of tax audits, the identification of new tax contingencies, or the rendering of relevant court decisions. An unfavorable resolution of assessments by a governmental authority could negatively impact the Company’s results of operations and cash flows in future periods.
The Company is subject to unclaimed or abandoned property (escheat) laws which require the Company to turn over to certain state governmental authorities the property of others held by the Company that has been unclaimed for specified periods of time. The Company is subject to audit by individual U.S. states with regard to its escheatment practices. Prior to fiscal year
2014the Company had not filed unclaimed property returns. During fiscal year
2014,the Company filed unclaimed property returns, provided additional information to the applicable governmental entities and remitted amounts due for unclaimed property liabilities. The settlement of unclaimed property liabilities did not have a material adverse impact on the financial position, results of operations or liquidity of the Company.
The Company sells a considerable number of gift cards, which are issued and administered by a
thirdparty gift card issuer and service provider, consistent with common retail industry practice. The
thirdparty gift card issuer is paid a net fee for its services by the Company. The
thirdparty gift card issuer and service provider, as well as a number of other restaurant companies, retailers and gift card issuers, were named as defendants in a qui tam action filed under seal in
2013by William French on behalf of the State of Delaware in the Superior Court of Delaware in and for New Castle County. The complaint alleges that the Company and the other defendants intentionally failed to report and remit money with respect to unused gift cards to the State of Delaware under the Delaware Escheats Law, and knowingly made, used or caused to be made or used, false statements and records to conceal, avoid or decrease an obligation to pay or transmit such money to Delaware in violation of the Delaware False Claims and Reporting Act (DFCRA). The complaint further alleges that the amount of money that the Company should have escheated to Delaware is approximately
$30million. The complaint seeks monetary damages (including treble damages under the DFCRA), penalties, and attorneys’ fees and costs. The case was unsealed in
2014,at which time the court also granted the State of Delaware’s motion to intervene. In
2016,the Company filed a motion to dismiss the case, and a hearing on that motion was held in
2016.The motion to dismiss is currently pending. All parties to the case are now in the process of seeking discovery. The deadline for completing fact discovery is
2017.The Company believes it is in compliance with the Delaware Escheats Law and has not violated the DFCRA. The Company has been vigorously defending the action, and intends to continue to do so. The Company has not recorded a liability for this matter.
The Company currently buys a majority of its beef from
twosuppliers. Although there are a limited number of beef suppliers, management believes that other suppliers could provide similar product on comparable terms. A change in suppliers, however, could cause supply shortages and a possible loss of sales, which would affect operating results adversely.
The entire disclosure for commitments and contingencies.
Reference 1: http://www.xbrl.org/2003/role/presentationRef