Cracker Barrel 2014 Annual Report Download - page 41

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uses a lease life that generally begins on the date that the
Company becomes legally obligated under the lease,
including the rent holiday periods, and generally extends
through certain renewal periods that can be exercised
at the 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 consis-
tent 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:
2014 2013 2012
Advertising expense $ 63,707 $ 59,957 $ 56,198
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 recog-
nized, compensation expense is reversed.
If a share-based compensation award is modied aer
the grant date, incremental compensation expense is
recognized 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
compensation expense for vested awards is recognized
immediately. For unvested awards, the sum of the incremental
compensation expense and the remaining unrecognized
compensation 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 13 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.
Net income per share – Basic consolidated net income
per share is computed by dividing consolidated net income
to common shareholders by the weighted average number
of common shares outstanding for the reporting period.
Diluted consolidated net income per share reects the potential
dilution that could occur if securities, options or other