Buffalo Wild Wings 2005 Annual Report Download - page 58

BUFFALO WILD WINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 26, 2004 AND DECEMBER 25, 2005
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER−SHARE AMOUNTS)
Pro forma disclosure of the net earnings impact of applying an alternative
method of recognizing stock compensation expense over the vesting period is
based on the fair value of all stock−based awards on the date of grant. If the
Company had elected to recognize compensation cost based on the fair value at
the grant date for its stock options under SFAS No. 123, the Company's net
earnings would have been decreased to the pro forma amounts indicated in the
table below.
The impact of calculating compensation cost for stock options under SFAS
No. 123 is reflected over the options' vesting period, typically four years.
Fiscal Years Ended
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
December 28, December 26, December 25,
2003 2004 2005
−−−−−−−−−−−−−− −−−−−−−−−−−−−− −−−−−−−−−−−−−
Net earnings, as reported $ 3,583 7,201 8,880
Add:
Total stock−based employee compensation expense
included in reported 81
earnings, net of related tax effects 23 5 1,054
Deduct:
Total stock−based employee compensation
expense determined under the fair
value−based method for stock option and purchase
plans, net of related tax effects (253) (739) (1,210)
−−−−−−−−−−−−−− −−−−−−−−−−−−−− −−−−−−−−−−−−−
Pro forma net earnings $ 3,353 7,043 8,724
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Net earnings per common share:
As reported (basic) $ 0.66 0.88 1.05
Pro forma (basic) 0.59 0.86 1.03
As reported (dilutive) 0.55 0.84 1.02
Pro forma (dilutive) 0.49 0.82 1.00
The fair value of each option grant is estimated on the date of grant using the
Black−Scholes option−pricing model with the following assumptions:
Stock Options
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
December 28, December 26, December 25,
2003 2004 2005
−−−−−−−−−−−−−− −−−−−−−−−−−−−− −−−−−−−−−−−−−
Expected dividend yield 0.0% 0.0% 0.0%
Expected stock price volatility 39.0% 38.0% 40.1%
Risk−free interest rate 2.5% 2.9% 3.5%
Expected life of options 5 years 5 years 5 years
Employee Stock Purchase Plan
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
December 28, December 26, December 25,
2003 2004 2005
−−−−−−−−−−−−−− −−−−−−−−−−−−−− −−−−−−−−−−−−−
Expected dividend yield 0.0% 0.0% 0.0%
Expected stock price volatility 39.0% 38.0% − 39.0% 38.0% − 41.8%
Risk−free interest rate 2.5% 2.5% − 3.4% 3.1% − 4.3%
Expected life of options 0.5 years 0.5 years 0.5 years
The per−share weighted average fair value of stock options granted during
2003, 2004, and 2005 was $5.41, $10.44, and $14.02, respectively. Volatility was
calculated based on an analysis of the Company's industry peers and its own
stock price since the initial public offering in fiscal 2003.
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