Buffalo Wild Wings 2015 Annual Report Download - page 49

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We account for the assets and liabilities of these funds as “restricted assets” and “system-wide payables” on our
accompanying consolidated balance sheets.
Contributions from franchisees related to the national advertising fund constitute agency transactions and are not
recognized as revenues and expenses. Related advertising obligations are accrued and the costs expensed at the same time the
related contributions are recognized. These advertising fees are recorded as a liability against which specific costs are charged.
From time to time, we borrow funds from our national advertising and gift card funds. As these borrowings are
restricted for the use of the national advertising and gift card funds, we show amounts borrowed as a current liability on our
consolidated balance sheets. The borrowings bear no interest and are payable to the national advertising and gift card funds on
demand.
(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 2015 was
$13,647 before income taxes and consisted of restricted stock units, stock options, ESPP, and stock appreciation rights expense
of $11,510, $1,393, $726, and $56 respectively. The related total tax benefit recognized in 2015 was $4,639.