Jack In The Box 2011 Annual Report Download - page 55

Table of Contents
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these circumstances, to the extent we determine there is no requirement for remitting balances to government agencies under unclaimed property laws,
card balances may be recognized as a reduction to selling, general and administrative expenses in the accompanying consolidated statements of earnings.
Income recognized on unredeemed gift card balances was $0.6 million in fiscal 2011 and $0.7 million in fiscal 2010 and 2009.
Pre-opening costs associated with the opening of a new restaurant consist primarily of employee training costs and are expensed as incurred and are
included in selling, general and administrative expenses in the accompanying consolidated statements of earnings.
Restaurant closure costs — All costs associated with exit or disposal activities are recognized when they are incurred. Restaurant closure costs, which
are included in impairment and other charges, net in the accompanying consolidated statements of earnings, consist of future lease commitments, net of
anticipated sublease rentals, and expected ancillary costs.
Self-insurance — We are self-insured for a portion of our workers’ compensation, general liability, employee medical and dental, and automotive
claims. We utilize a paid-loss plan for our workers’ compensation, general liability and automotive programs, which have predetermined loss limits per
occurrence and in the aggregate. We establish our insurance liability (undiscounted) and reserves using independent actuarial estimates of expected losses
for determining reported claims and as the basis for estimating claims incurred but not reported.
Advertising costs — We administer marketing funds which include contractual contributions of approximately 5% and 1% of sales at all franchise
and company-operated Jack in the Box and Qdoba restaurants, respectively. We record contributions from franchisees as a liability included in accrued
liabilities in the accompanying consolidated balance sheets until such funds are expended. The contributions to the marketing funds are designated for
advertising and we act as an agent for the franchisees with regard to these contributions. Therefore, we do not reflect franchisee contributions to the
funds in our consolidated statements of earnings or cash flows.
Production costs of commercials, programming and other marketing activities are charged to the marketing funds when the advertising is first used for
its intended purpose, and the costs of advertising are charged to operations as incurred. Total contributions and other marketing expenses, are included
in selling, general, and administrative expenses in the accompanying consolidated statements of earnings. The following table provides a summary of
advertising costs related to company-operated restaurants in each year ( in thousands):
  
Jack in the Box $ 63,094 $ 83,971 $ 95,155
Qdoba 7,433 5,860 4,929
Total $ 70,527 $ 89,831 $ 100,084
Share-based compensation — We account for our share-based compensation as required by the FASB authoritative guidance on stock compensation ,
which generally requires, among other things, that all employee share-based compensation be measured using a fair value method and that the resulting
compensation cost be recognized in the financial statements. Compensation expense for our share-based compensation awards is generally recognized on
a straight-line basis over the shorter of the vesting period or the period from the date of grant to the date the employee becomes eligible to retire.
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