Cracker Barrel 2013 Annual Report Download - page 41

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Company’s option, for which at the inception of the lease,
it is reasonably assured that the Company will exercise those
renewal options. is lease period is consistent with the
period over which leasehold improvements are amortized.
Advertising – e Company expenses the costs of
producing advertising the rst time the advertising takes
place. Other advertising costs are expensed as incurred.
Advertising expense for each of the three years was
as follows:
2013 2012 2011
Advertising expense $ 59,957 $ 56,198 $ 48,889
Share-based compensation – e Company’s share-based
compensation consists of nonvested stock, performance-
based market stock units (“MSU Grants”) and stock options.
Share-based compensation is recorded in general and
administrative expenses in the Consolidated Statements of
Income. Share-based compensation expense is recognized
based on the grant date fair value and the achievement of
performance conditions for certain awards. e Company
recognizes share-based compensation expense on a straight-
line basis over the requisite service period, which is
generally the award’s vesting period, or to the date on which
retirement eligibility is achieved, if shorter.
Certain nonvested stock awards and the Company’s MSU
Grants contain performance conditions. Compensation
expense for performance-based awards is recognized when it
is probable that the performance criteria will be met. If
any performance goals are not met, no compensation
expense is ultimately recognized and, to the extent previously
recognized, compensation expense is reversed.
If a share-based compensation award is modied aer the
grant date, incremental compensation expense is recog-
nized in an amount equal to the excess of the fair value of the
modied award over the fair value of the original award
immediately before the modication. Incremental compen-
sation expense for vested awards is recognized immediately.
For unvested awards, the sum of the incremental com-
pensation expense and the remaining unrecognized compen-
sation expense for the original award on the modication
date is recognized over the modied service period.
Additionally, the Company’s policy is to issue shares of
common stock to satisfy exercises of share-based compensa-
tion awards.
Income taxes – e Company’s provision for income taxes
includes employer tax credits for FICA taxes paid on
employee tip income and other employer tax credits are
accounted for by the ow-through method. Deferred income
taxes reect the net tax eects of temporary dierences
between the carrying amounts of assets and liabilities for
nancial reporting purposes and the amounts used for
income tax purposes. e Company recognizes (or derecog-
nizes) a tax position taken or expected to be taken in a tax
return in the nancial statements when it is more likely than
not (i.e., a likelihood of more than y percent) that the
position would be sustained (or not sustained) upon
examination by tax authorities. A recognized tax position is
then measured at the largest amount of benet that is greater
than y percent likely of being realized upon ultimate
selement. e Company recognizes, net of tax, interest and
estimated penalties related to uncertain tax positions in
its provision for income taxes. See Note 14 for additional
information regarding income taxes.
Comprehensive income – Comprehensive income
includes net income and the eective unrealized portion of
the changes in the fair value of the Company’s interest
rate swaps.
Discontinued operations – e Company classies the
results of operations of a closed store as a discontinued
operation when the operations and cash ows of the store
have been or will be eliminated from ongoing operations,
the Company no longer has any signicant continuing
involvement in the operations associated with the store aer
closure and the results are material to the Company’s
consolidated nancial position, results of operations or cash
ows. In determining whether the cash ows have been or
will be eliminated from operations, the Company considers
the proximity of the closed store to any remaining open