Buffalo Wild Wings 2011 Annual Report Download - page 26

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26
Stock-Based Compensation
We account for stock-based compensation in accordance with the fair value recognition provisions, under which we
use the Black-Scholes-Merton pricing model, which requires the input of subjective assumptions. These assumptions include
the expected life of the options, expected volatility over the expected term, the risk-free interest rate, and the expected
forfeitures.
Compensation expense for restricted stock units is recognized for the expected number of shares vesting at the end of
each annual period. Restricted stock units granted in 2011, 2010 and 2009 are subject to three-year cliff vesting and a
cumulative three-year earnings target. The number of units that vest is based on performance against the target. Stock-based
compensation is recognized for the expected number of shares vesting at the end of the three-year period and is expensed
over that period. For these restricted stock unit grants, significant assumptions are made to estimate the expected net earnings
levels for future years.
Results of Operations
Our operating results for 2011, 2010, and 2009, are expressed below as a percentage of total revenue, except for the
components of restaurant operating costs, which are expressed as a percentage of restaurant sales.
Fiscal Years Ended
Dec. 25,
2011
Dec. 26,
2010
Dec. 27,
2009
Revenue:
Restaurant sales
91.4
%
90.5%
90.7%
Franchise royalties and fees
8.6 9.5 9.3
Total revenue
100.0 100.0 100.0
Costs and expenses:
Restaurant operating costs:
Cost of sales
28.3 29.0 30.2
Labor
30.1 30.1 30.0
Operating
15.3 16.0 15.6
Occupancy
6.1 6.6 6.6
Depreciation and amortization
6.4 6.4 6.1
General and administrative
9.3 8.8 9.2
Preopening
1.9 1.4 1.4
Loss on asset disposals and store closures
0.2 0.3 0.4
Total costs and expenses
90.7 90.8 91.8
Income from operations
9.3 9.2 8.2
Investment income
—
0.1 0.2
Earnings before income taxes
9.3 9.3 8.4
Income tax expense
2.9 3.0 2.7
Net earnings
6.4
%
6.3%
5.7%