Pier 1 2009 Annual Report Download - page 55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 1—DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
affected by changes in key actuarial assumptions such as the discount rate, compensation increase rates,
or retirement dates used to determine the projected benefit obligation. Additionally, changes made to
the provisions of the Plans may impact current and future benefit costs. In accordance with accounting
rules, changes in benefit obligations associated with these factors may not be immediately recognized as
costs in the statement of operations, but recognized in future years over the remaining average service
period of plan participants. See Note 7 of the Notes to Consolidated Financial Statements for further
discussion.
Income taxes—The Company accounts for income taxes using the asset and liability method.
Under this method, deferred tax assets and liabilities are determined based on differences between
financial reporting and income tax bases of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax
assets and liabilities are recorded in the Company’s consolidated balance sheet and are classified as
current or noncurrent based on the classification of the related assets or liabilities for financial
reporting purposes. A valuation allowance is recorded to reduce the carrying amounts of deferred tax
assets unless it is more likely than not those assets will be realized. In assessing the need for a
valuation allowance, all available evidence is considered including past operating results, estimates of
future income, and tax planning strategies. At any point in time, multiple tax years are subject to audit
by various jurisdictions and the Company records reserves for estimates of tax exposures for foreign
and domestic tax audits. However, negotiations with taxing authorities may yield results different from
those currently estimated. See Note 10 of the Notes to Consolidated Financial Statements for further
discussion.
Loss per share—Basic loss per share amounts were determined by dividing loss from continuing
operations, loss from discontinued operations and net loss by the weighted average number of common
shares outstanding for the period. Diluted loss per share amounts were similarly computed, but would
have included the effect, if dilutive, of the Company’s weighted average number of stock options
outstanding and shares of unvested restricted stock.
48