Supercuts 2010 Annual Report Download - page 95

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Sales Taxes:
Sales taxes are recorded on a net basis (rather than as both revenue and an expense) within the Company's Consolidated Statement of
Operations.
Income Taxes:
Deferred income tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the
Consolidated Financial Statements or income tax returns. Deferred income tax assets and liabilities are determined based on the differences
between the financial statement and tax basis of assets and liabilities using currently enacted tax rates in effect for the years in which the
differences are expected to reverse. Realization of deferred tax assets is ultimately dependent upon future taxable income. Inherent in the
measurement of deferred balances are certain judgments and interpretations of tax laws and published guidance with respect to the Company's
operations. Income tax expense is primarily the current tax payable for the period and the change during the period in certain deferred tax assets
and liabilities.
Net Income Per Share:
The Company's basic earnings per share is calculated as net income divided by weighted average common shares outstanding, excluding
unvested outstanding restricted stock awards and restricted stock units. The Company's dilutive earnings per share is calculated as net income
divided by weighted average common shares and common share equivalents outstanding, which includes shares issuable under the Company's
stock option plan and long-term incentive plan, shares issuable under contingent stock agreements, and dilutive securities. Stock-based awards
with exercise prices greater than the average market value of the Company's common stock are excluded from the computation of diluted
earnings per share. The Company's diluted earnings per share will also reflect the assumed conversion under the Company's convertible debt if
the impact is dilutive. The impact of the convertible debt is excluded from the computation of diluted earnings per share when interest expense
per common share obtainable upon conversion is greater than basic earnings per share.
Comprehensive Income:
Components of comprehensive income for the Company include net income, changes in fair value of financial instruments designated as
hedges of interest rate or foreign currency exposure and foreign currency translation charged or credited to the cumulative translation account
within shareholders'
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