AutoZone 2011 Annual Report Download - page 109

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Earnings per Share: Basic earnings per share is based on the weighted average outstanding common shares.
Diluted earnings per share is based on the weighted average outstanding common shares adjusted for the effect of
common stock equivalents, which are primarily stock options. There were no stock options excluded from the
diluted earnings per share computation that would have been anti-dilutive as of August 27, 2011 and August 28,
2010. At August 29, 2009, approximately 30,000 shares were excluded from the diluted earnings per share
computation.
Share-Based Payments: Share-based payments include stock option grants and certain other transactions under
the Company’s stock plans. The Company recognizes compensation expense for its share-based payments based
on the fair value of the awards. See “Note B – Share-Based Payments” for further discussion.
Risk and Uncertainties: In fiscal 2011, one class of similar products accounted for 10 percent of the Company’s
total revenues, and one vendor supplied more than 10 percent of the Company’s total purchases. No other class of
similar products accounted for 10 percent or more of total revenues, and no other individual vendor provided more
than 10 percent of total purchases.
Recent Accounting Pronouncements: In December 2010, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) 2010-28, Intangibles – Goodwill and Other, which amends
Accounting Standards Codification (“ASC”) Topic 350, Intangibles – Goodwill and Other. ASU 2010-28
modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For
those reporting units, an entity is required to perform Step 2 of the goodwill impairment analysis if it is more
likely than not that a goodwill impairment exists based on a qualitative assessment of adverse factors. The
Company does not expect the provisions of ASU 2010-28 to have a material impact to the consolidated financial
statements. This update will be effective for the Company’s fiscal year ending August 25, 2012.
In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and
Disclosure Requirements in U.S. GAAP and IFRSs, which amends ASC Topic 820, Fair Value Measurement. The
purpose of ASU 2011-04 is to clarify the intent about the application of existing fair value measurement and
disclosure requirements and to change a particular principle or requirement for measuring fair value or for
disclosing information about fair value measurements. The Company does not expect the provisions of ASU
2011-04 to have a material impact to its consolidated financial statements. This update will be effective for the
Company’s third quarter ending May 5, 2012.
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which amends ASC Topic
220, Comprehensive Income. The objective of ASU 2011-05 is to improve the comparability, consistency and
transparency of financial reporting and to increase the prominence of items reported in other comprehensive
income. The update will require entities to present items of net income, items of other comprehensive income and
total comprehensive income in one continuous statement or two separate consecutive statements, and entities will
no longer be allowed to present items of other comprehensive income in the statement of stockholders’ equity.
Reclassification adjustments between other comprehensive income and net income will be presented separately on
the face of the financial statements. The Company does not expect the provisions of ASU 2011-05 to have a
material impact to its consolidated financial statements. This update will be effective for the Company’s fiscal
year ending August 31, 2013.
In August 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other, which amends ASC
Topic 350, Intangibles – Goodwill and Other. The purpose of ASU 2011-08 is to simplify how an entity tests
goodwill for impairment. Entities will assess qualitative factors to determine whether it is more likely than not
that a reporting unit’s fair value is less than its carrying value. In instances where the fair value is determined to
be less than the carrying value, entities will perform the two-step quantitative goodwill impairment test. The
Company does not expect the provisions of ASU 2011-08 to have a material impact to its consolidated financial
statements. This update will be effective for the Company’s fiscal year ending August 31, 2013.
47
10-K