Cracker Barrel 2015 Annual Report Download - page 35

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33
e Company uses a leaselife that generally begins on the
date that the Companybecomes legally obligated under the
lease, including the rent holiday periods, and generally extends
through certain renewal periods that can be exercisedat the
Company’soption, for which at the inception of the lease,
it is reasonably assured that the Companywill exercise those
renewal options. is lease period is consistent with the
period overwhich leasehold improvements are amortized.
Advertising –e Companyexpenses the costs of
producingadvertising the rsttime the advertisingtakes
place. Other advertising costs are expensedas incurred.
Advertising expense for each of the three yearswas as
follows:
2015 2014 2013
Advertising expense $68,665 $63,707 $59,957
Share-based compensation –e Company’s share-based
compensation consists of nonvestedstock, performance-
based marketstock units (“MSU Grants”) and stock options.
Share-based compensation is recorded in general and
administrative expenses in the Consolidated Statements of
Income. Share-based compensation expense is recognized
based on the grant date fair value and the achievement of
performance conditions for certain awards. e Company
recognizes share-based compensation expense on a straight-
line basis over the requisite service period, which is
generally the award’s vesting period, or to the date on which
retirement eligibility is achieved,if shorter.
Certain nonvestedstock awards and the Company’s MSU
Grants contain performance conditions. Compensation
expense for performance-based awards is recognized when it
is probable that the performance criteria will be met. If any
performance goals are not met, no compensation expense is
ultimately recognized and, to the extent previously recog-
nized,compensation expense is reversed.
If a share-based compensation awardis modied aer the
grant date, incrementalcompensation expenseis recognized in
an amount equal to the excess of the fair value of the modied
award over the fair value of the originalawardimmediately
before the modication. Incrementalcompensation expense
for vested awardsis recognized immediately. For unvested
awards, the sum of the incremental compensation expenseand
the remaining unrecognized compensation expense for the
original award on the modication date is recognized over the
modied service period.
Additionally, the Company’s policy is to issue sharesof
common stock to satisfy exercises of share-based compensa-
tion awards.
Income taxes –e Company’s provision for income taxes
includes employertax credits for FICA taxes paid on
employee tip income and other employer taxcredits are
accounted for by the ow-through method. Deferred income
taxes reectthe net tax eects of temporary dierences
between the carrying amounts of assetsand liabilities for
nancial reporting purposes and the amounts used for
income tax purposes.e Companyrecognizes (orderecog-
nizes)a tax position taken or expected to be taken in a tax
return in the nancial statements when it is more likely than
not (i.e., a likelihood of more than y percent) that the
position would be sustained (or not sustained) upon
examination by tax authorities. A recognized taxposition is
then measured at the largest amount of benet that is greater
than y percent likely of being realized upon ultimate
selement. e Companyrecognizes,net of tax,interest and
estimatedpenalties related to uncertain tax positions in its
provision for income taxes. SeeNote 13 for additional
information regarding income taxes.
Comprehensive income – Comprehensive income includes
net income and the eective unrealized portion of the
changes in the fair value of the Company’s interest rate swaps.
Netincome per share– Basic consolidated net income
per shareis computed by dividing consolidated net income
to common shareholders by the weightedaverage number
of common shares outstanding for the reporting period.
Diluted consolidated net income per share reects the
potential dilution thatcould occur if securities, options or
other contracts to issue common stock were exercised
or converted into common stock and is based upon the