Kohl's 2010 Annual Report Download - page 56
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Table of Contents
Advertising costs, which include primarily television and radio broadcast, direct mail, and newspaper circulars, are expensed when the advertisement is
first seen. Advertising costs, net of related vendor allowances, were as follows:
Gross advertising costs $988 $1,037
Vendor allowances (142) (147)
Net advertising costs $ 846 $ 890
Net advertising costs as a percent of net sales 4.9% 5.4%
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 $991 $885
Denominator—weighted average shares
Basic 305 306
Impact of dilutive employee stock options (a) 1 1
Diluted 306 307
Net income per share:
Basic $ 3.25 $2.89
Diluted $3.23 $2.89
(a) Excludes 8 million options for 2010, 17 million options for 2009 and 18 million options for 2008 as the impact of such options was antidilutive.
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