Lumber Liquidators 2013 Annual Report Download - page 61

Lumber Liquidators Holdings, Inc.
Notes to Consolidated Financial Statements
(amounts in thousands, except share data and per share amounts)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES − (continued)
the Company takes into account various factors, including the nature, frequency and severity of current and
cumulative losses, expected level of future taxable income, the duration of statutory carryforward periods and
tax planning alternatives. In future periods, any valuation allowance will be re-evaluated in accordance with
ASC 740, and a change, if required, will be recorded through income tax expense in the period such
determination is made.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the relevant taxing authorities, based on the technical
merits of its position. The tax benefits recognized in the financial statements from such a position are
measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate
settlement. The amount of unrecognized tax benefits was not significant for 2013, 2012 or 2011. The
Company classifies interest and penalties related to income tax matters as a component of income tax expense.
Net Income per Common Share
Basic net income per common share is determined by dividing net income by the weighted average
number of common shares outstanding during the year. Diluted net income per common share is determined
by dividing net income by the weighted average number of common shares outstanding during the year, plus
the dilutive effect of common stock equivalents, including stock options and restricted stock awards. Common
stock and common stock equivalents included in the computation represent shares issuable upon assumed
exercise of outstanding stock options and release of restricted stock awards, except when the effect of their
inclusion would be antidilutive.
NOTE 2. ACQUISITION
On September 28, 2011, the Company entered into an agreement to acquire certain assets of Sequoia
Floorings Inc. relating to their quality control and assurance, product development, claims management and
logistics operations in China. The acquisition agreement included a purchase price of approximately $8,300, of
which approximately $4,700 was paid in cash. SG&A expenses in 2011 included acquisition-related expenses
of approximately $600.
The purchase price for the acquisition was allocated to the assets acquired and liabilities assumed based
upon their respective fair values. The excess consideration was recorded as goodwill and approximated
$8,643.
NOTE 3. PROPERTY AND EQUIPMENT
Property and equipment consisted of:
December 31,
2013 2012
Land ............................................ $ 4,937 $ —
Property and Equipment ............................... 40,833 36,847
Computer Software and Hardware ......................... 38,317 33,344
Leasehold Improvements ............................... 22,230 16,112
Assets under Construction − Supply Chain ................... 5,663 —
111,980 86,303
Less: Accumulated Depreciation and Amortization .............. 46,033 38,539
Property and Equipment, net ............................ $65,947 $47,764
As of December 31, 2013 and 2012, the Company had capitalized $28,391 and $24,398 of computer
software costs, respectively. Amortization expense related to these assets was $2,659, $2,388 and $2,094 for
2013, 2012 and 2011, respectively.
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