Buffalo Wild Wings 2014 Annual Report Download - page 51

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(t) Earnings Per Common Share
Basic earnings per common share excludes dilution and is computed by dividing the net earnings attributable to Buffalo
Wild Wings by the weighted average number of common shares outstanding during the period. Diluted earnings per common
share include dilutive common stock equivalents consisting of stock options determined by the treasury stock method.
Restricted stock units are contingently issuable shares subject to vesting based on performance criteria. Vesting typically occurs
in the fourth quarter of the year when income targets have been met. Upon vesting, the shares to be issued are included in the
diluted earnings per share calculation as of the beginning of the period in which the vesting conditions are satisfied. Restricted
stock units included in diluted earnings per share are net of the required minimum employee withholding taxes.
(u) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
balance sheet carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Any effects of changes in income tax rates or law changes are included in the provision for
income taxes in the period enacted. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets
unless it is more likely than not that such assets will be realized.
(v) Deferred Lease Credits
Deferred lease credits consist of reimbursement of costs of leasehold improvements from our lessors and adjustments to
recognize rent expense on a straight-line basis. Reimbursements are amortized on a straight-line basis over the term of the
applicable lease, without consideration of renewal options. Leases typically have an initial lease term of between 10 and 15
years and contain renewal options under which we may extend the terms for periods of three to five years. Certain leases
contain rent escalation clauses that require higher rental payments in later years. Leases may also contain rent holidays, or free
rent periods, during the lease term. Rent expense is recognized on a straight-line basis over the term of the lease commencing at
the start of our construction period for the restaurant, without consideration of renewal options, unless renewals are reasonably
assured because failure to renew would result in an economic penalty.
(w) Stock-Based Compensation
We maintain a stock equity incentive plan under which we may grant non-qualified stock options, incentive stock
options, and restricted stock units to employees, non-employee directors and consultants. We also have an employee stock
purchase plan (ESPP).
Stock-based compensation expense is recognized in the consolidated financial statements for granted, modified, or
settled stock options, and for expense related to the ESPP since the related purchase discounts exceeded the amount allowed for
non-compensatory treatment. Restricted stock units vesting upon the achievement of certain performance targets are expensed
based on the fair value on the date of grant, net of estimated forfeitures. All stock-based compensation is recognized as general
and administrative expense.
Total stock-based compensation expense recognized in the consolidated statement of earnings for fiscal year 2014 was
$14,253 before income taxes and consisted of restricted stock units, stock options, ESPP, and stock appreciation rights expense
of $12,474, $1,054, $705, and $20 respectively. The related total tax benefit recognized in 2014 was $4,917.
Total stock-based compensation expense recognized in the consolidated statement of earnings for fiscal year 2013 was
$11,496 before income taxes and consisted of restricted stock units, stock options, and ESPP expense of $9,899, $948 and
$649, respectively. The related total tax benefit recognized in 2013 was $3,913.
Total stock-based compensation expense recognized in the consolidated statement of earnings for fiscal year 2012 was
$8,119 before income taxes and consisted of restricted stock units, stock options, and ESPP expense of $6,710, $879 and $530,
respectively. The related total tax benefit recognized in 2012 was $2,670.