Build-A-Bear Workshop 2011 Annual Report Download - page 60

BUILD-A-BEAR WORKSHOP, INC. 2011 FORM 10-K
Notes to Consolidated Financial Statements (continued)
The Company accounts for its total liability for
uncertain tax positions according to the provisions of ASC
section 740-10-25. The Company recognizes estimated
interest and penalties related to uncertain tax positions in
income tax expense. See Note 9 – Income Taxes for
further discussion.
(s) Earnings (Loss) Per Share
Under the two-class method, basic earnings (loss) per
share is determined by dividing net income or loss allocated
to common stockholders by the weighted average number of
common shares outstanding during the period. Diluted
earnings or loss per share reflects the potential dilution that
could occur if options to issue common stock were
exercised. In periods in which the inclusion of such
instruments is anti-dilutive, the effect of such securities is not
given consideration.
(t) Stock-Based Compensation
The Company has share-based compensation plans
covering the majority of its management groups and its Board
of Directors. The Company accounts for share-based
payments utilizing the fair value recognition provisions of ASC
section 718. The Company recognizes compensation cost for
equity awards on a straight-line basis over the requisite
service period for the entire award. See Note 13 – Stock
Incentive Plans.
For fiscal 2011, 2010 and 2009, selling, general and
administrative expense includes $4.6 million, $4.8 million
and $4.3 million, respectively, of stock-based compensation
expense. As of December 31, 2011, there was $6.5 million
of total unrecognized compensation expense related to
nonvested restricted stock awards and options which is
expected to be recognized over a weighted-average period
of 1.6 years.
(u) Comprehensive Income (Loss)
Comprehensive income (loss) is comprised of net income
or loss and foreign currency translation adjustments.
(v) Fair Value of Financial Instruments
For purposes of financial reporting, management has
determined that the fair value of financial instruments,
including cash and cash equivalents, receivables, accounts
payable and accrued expenses, approximates book value at
December 31, 2011 and January 1, 2011.
(w) Use of Estimates
The preparation of the consolidated financial statements
requires management of the Company to make a number of
estimates and assumptions relating to the reported amount of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and
expenses during the reporting period. The assumptions used
by management in future estimates could change significantly
due to changes in circumstances, including, but not limited to,
challenging economic conditions. Accordingly, future
estimates may change significantly. Significant items subject
to such estimates and assumptions include the valuation of
long-lived assets, including goodwill, trade credits and
deferred income tax assets, inventories, and the determination
of deferred revenue under the Company’s customer
loyalty program.
(x) Sales Tax Policy
The Company’s revenues in the consolidated statement of
operations are net of sales taxes.
(y) Foreign Currency Translation
Assets and liabilities of the Company’s foreign operations
with functional currencies other than the U.S. dollar are
translated at the exchange rate in effect at the balance sheet
date, while revenues and expenses are translated at average
rates prevailing during the years. Translation adjustments are
reported in accumulated other comprehensive income, a
separate component of stockholders’ equity.
(3) PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other current assets consist of the
following (in thousands):
December 31,
2011
January 1,
2011
Prepaid rent $ 7,745 $ 7,959
Prepaid income taxes 1,970 2,458
Other 8,139 8,008
$17,854 $18,425
(4) PROPERTY AND EQUIPMENT
Property and equipment consist of the following
(in thousands):
December 31,
2011
January 1,
2011
Land $ 2,261 $ 2,261
Furniture and fixtures 39,306 41,819
Computer hardware 20,705 23,672
Building 14,970 14,970
Leasehold improvements 137,352 137,335
Computer software 35,326 29,660
Construction in progress 2,543 1,918
252,463 251,635
Less accumulated depreciation 175,018 163,606
$ 77,445 $ 88,029
For 2011, 2010 and 2009, depreciation expense was
$22.8 million, $24.9 million and $26.7 million, respectively.
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