Cracker Barrel 2011 Annual Report Download - page 24

largest shares of our food purchases at approximately 13%,
11%, 11% and 11%, respectively. Other categories affected by
the commodities markets, such as grains and seafood, may
each account for as much as 7% of our food purchases. While
we have some of our food items prepared to our specifica-
tions, our food items are based on generally available
products, and if any existing suppliers fail, or are unable to
deliver in quantities required by us, we believe that there
are sufficient other quality suppliers in the marketplace that
our sources of supply can be replaced as necessary to allow
us to avoid any material adverse effects that could be caused
by such unavailability. We also recognize, however, that
commodity pricing is extremely volatile and can change
unpredictably and over short periods of time. Changes
in commodity prices would affect us and our competitors
generally, and depending on the terms and duration of supply
contracts, sometimes simultaneously. We enter into contracts
for certain of our products in an effort to minimize volatility
of supply and pricing. In many cases, or over the longer
term, we believe we will be able to pass through some or much
of the increased commodity costs by adjusting our menu
pricing. From time to time, competitive circumstances, or
judgments about consumer acceptance of price increases, may
limit menu price flexibility, and in those circumstances,
increases in commodity prices can result in lower margins.
RECENT ACCOUNTING PRONOUNCEMENTS
NOT YET ADOPTED
Fair Value Measurement and Disclosure Requirements
In May 2011, the Financial Accounting Standards Board
(“FASB”) issued amended accounting guidance which provides
additional guidance on how to determine fair value under
existing standards and expands existing disclosure requirements
on a prospective basis. e guidance is effective for fiscal
years and interim periods beginning aer December 15, 2011.
We do not expect that the adoption of this accounting
guidance in the third quarter of 2012 will have a significant
impact on our consolidated financial statements.
Presentation of Comprehensive Income
In June 2011, the FASB issued amended accounting guidance
which requires companies to present total comprehensive
income and its components and the components of net
income in either a single continuous statement of
comprehensive income or in two consecutive statements
reporting net income and comprehensive income.is
requirement eliminates the option to present components
of comprehensive income as part of the statement of
changes in shareholders’ equity. is guidance affects only
the presentation of comprehensive income and does
not change the components of comprehensive income.is
guidance is effective for fiscal years beginning aer
December 15, 2011 on a retrospective basis. We do not
expect that the adoption of this accounting guidance
in the first quarter of 2013 will have a significant impact
on our consolidated financial statements.
CRITICAL ACCOUNTING ESTIMATES
We prepare our Consolidated Financial Statements in
conformity with GAAP. e preparation of these financial
statements requires us to make estimates and assumptions
about future events and apply judgments that affect the
reported amounts of assets, liabilities, revenue, expenses and
related disclosures. We base our estimates and judgments on
historical experience, current trends, outside advice from
parties believed to be experts in such maers and on various
other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. However,
because future events and their effects cannot be determined
with certainty, actual results could differ from those assumptions
and estimates, and such differences could be material.
Our significant accounting policies are discussed in Note 2
to the Consolidated Financial Statements. Judgments and
uncertainties affecting the application of those policies may
result in materially different amounts being reported under
different conditions or using different assumptions. Critical
accounting estimates are those that:
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portrayal of both our financial condition and operating
results and
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judgments, oen as a result of the need to make estimates
about the effect of maers that are inherently uncertain.
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