Kohl's 2009 Annual Report Download - page 54

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Table of Contents


 

Preopening expenses relate to the costs associated with new store openings, including advertising, hiring and training costs for new employees,
processing and transporting initial merchandise and rent expense. Preopening costs are expensed as incurred.

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recorded based on
differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes.
Deferred tax assets and liabilities are calculated using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.
We establish valuation allowances for deferred tax assets when we believe it is more likely than not that the asset will not be realizable for tax purposes.
We recognize interest and penalty expense related to unrecognized tax benefits in our provision for income tax expense.

Basic net income per share is net income divided by the average number of common shares outstanding during the period. Diluted net income per share
includes incremental shares assumed to be issued upon exercise of stock options.
The information required to compute basic and diluted net income per share is as follows:
  

Numerator—net income  $885 $1,084
Denominator—weighted average shares
Basic  306 318
Impact of dilutive employee stock options (a)   1 2
Diluted  307 320
Net income per share:
Basic   $2.89 $3.41
Diluted  $2.89 $3.39
(a) Excludes 17 million options for 2009, 18 million options for 2008 and 9 million options for 2007 as the impact of such options was antidilutive.

Stock-based compensation expense, including stock options and nonvested stock awards, is recognized on a straight-line basis over the vesting period
based on the fair value of awards which are expected to vest. The fair value of all share-based awards is estimated on the date of grant.
F-12