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Net Income (Loss) Per Share
 9 Months Ended
Sep. 30, 2012
Net Income (Loss) Per Share [Abstract]  
Net Income (Loss) Per Share

(4) Net Income (Loss) Per Share

We compute net income (loss) per share of Class A and Class B common stock using the two class method. Under the provisions of the two class method, basic net income (loss) per share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common and dilutive common equivalent shares outstanding during the period. The computation of the diluted net income (loss) per share of Class B common stock assumes the conversion of Class A common stock to Class B common stock, while the diluted net income (loss) per share of Class A common stock does not assume the conversion of those shares.

In accordance with the two class method, the undistributed earnings for each period are allocated based on the contractual participation rights of the Class A and Class B common shares and the restricted shares as if the earnings for the period had been distributed. Considering the terms of the Company’s charter which provides that, if and when dividends are declared on our common stock in accordance with Delaware General Corporation Law, equivalent dividends shall be paid with respect to the shares of Class A common stock and Class B common stock and that both classes of common stock have identical dividend rights and would share equally in our net assets in the event of liquidation, we have allocated undistributed losses on a proportionate basis. Additionally, the Company has paid dividends equally to both classes of common stock and the unvested restricted shares since it initiated a quarterly cash dividend in November 2006.

Instruments granted in unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities prior to vesting. As such, the Company’s restricted stock awards are considered participating securities for purposes of calculating earnings per share. Under the two class method, dividends paid on unvested restricted stock are allocated to these participating securities and therefore impacts the calculation of amounts allocated to common stock.

 

The following table includes net income (loss) applicable to common stockholders used to compute basic net income (loss) per share for the periods ended (in thousands, except per share amounts):

 

                                 
    Nine months ended September 30,  
    2011     2012  
    Class A     Class B     Class A     Class B  

Numerator:

                                

Net income (loss)

   $ 538     $ 1,433     $ (319 )    $ (543 ) 

Dividends paid to participating securities

     —         (191 )      —         (262 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss) applicable to common stockholders

   $ 538     $ 1,242     $ (319 )    $ (805 ) 

Denominator:

                                

Weighted average number of shares outstanding used to calculate basic net income (loss) per share

     10,027       23,136       9,576       24,303  
   

 

 

    

 

 

    

 

 

    

 

 

  

Basic net income (loss) per share applicable to common stockholders

   $ 0.05     $ 0.05     $ (0.03 )    $ (0.03 ) 
   
    Three months ended September 30,  
    2011     2012  
    Class A     Class B     Class A     Class B  

Numerator:

                                

Net income (loss)

   $ 349     $ 904     $ (187 )    $ (356 ) 

Dividends paid to participating securities

     —         (66 )      —         (123 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss) applicable to common stockholders

   $ 349     $ 838     $ (187 )    $ (479 ) 

Denominator:

                                

Weighted average number of shares outstanding used to calculate basic net income (loss) per share

     9,851       23,673       9,570       24,536  
   

 

 

    

 

 

    

 

 

    

 

 

  

Basic net income (loss) per share applicable to common stockholders

   $ 0.04     $ 0.04     $ (0.02 )    $ (0.02 ) 

 

The following table calculates net income (loss) to diluted net income (loss) applicable to common stockholders used to compute diluted net income (loss) per share for the periods ended (in thousands, except per share amounts):

 

                                 
    Nine months ended September 30,  
    2011     2012  
    Class A     Class B     Class A     Class B  

Numerator:

                                

Net income (loss)

   $ 507     $ 1,464     $ (319 )    $ (543 ) 

Dividends paid to participating securities

     —         (191 )      —         (262 ) 

Reallocation of net income (loss) for Class A shares as a result of conversion of Class A to Class B shares

     —         507       —         (319 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss) applicable to common stockholders

   $ 507     $ 1,780     $ (319 )    $ (1,124 ) 
         

Denominator:

                                

Weighted average number of shares outstanding used to calculate basic net income (loss) per share

     10,027       23,136       9,576       24,303  

Weighted average stock options and warrants and common shares subject to repurchase or cancellation

     —         2,017       —         —    

Conversion of Class A to Class B common shares outstanding

     —         10,027       —         9,576  
   

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average number of shares outstanding used to calculate diluted net income (loss) per share

     10,027       35,180       9,576       33,879  
   

 

 

    

 

 

    

 

 

    

 

 

  

Diluted net income (loss) per share applicable to common stockholders

   $ 0.05     $ 0.05     $ (0.03 )    $ (0.03 ) 
   
    Three months ended September 30,  
    2011     2012  
    Class A     Class B     Class A     Class B  

Numerator:

                                

Net income (loss)

   $ 325     $ 928     $ (187 )    $ (356 ) 

Dividends paid to participating securities

     —         (66 )      —         (123 ) 

Reallocation of net income (loss) for Class A shares as a result of conversion of Class A to Class B shares

             325               (187 ) 
   

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss) applicable to common stockholders

   $ 325     $ 1,187     $ (187 )    $ (666 ) 
         

Denominator:

                                

Weighted average number of shares outstanding used to calculate basic net income (loss) per share

     9,851       23,673       9,570       24,536  

Weighted average stock options and warrants and common shares subject to repurchase or cancellation

     —         2,420       —         —    

Conversion of Class A to Class B common shares outstanding

     —         9,851       —         9,570  
   

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average number of shares outstanding used to calculate diluted net income (loss) per share

     9,851       35,944       9,570       34,106  
   

 

 

    

 

 

    

 

 

    

 

 

  

Diluted net income (loss) per share applicable to common stockholders

   $ 0.03     $ 0.03     $ (0.02 )    $ (0.02 ) 

The weighted average number of shares used to calculate the diluted net income (loss) per share includes the weighted average number of shares from the assumed conversion of Class A common stock to Class B common stock.

 

The computation of diluted net income (loss) per share excludes the following because their effect would be anti-dilutive (in thousands):

 

  •  

For the three and nine months ended September 30, 2011, outstanding options to acquire 3,312 and 3,466 shares of Class B common stock, respectively. For the three and nine months ended September 30, 2012, outstanding options to acquire 6,640 shares of Class B common stock.

 

  •  

For the three and nine months ended September 30, 2011, 3,489 shares of unvested Class B restricted common shares issued to employees and in connection with acquisitions. For the three and nine months ended September 30, 2012, 3,566 shares of unvested Class B restricted common shares issued to employees and in connection with acquisitions.

 

  •  

For the three and nine months ended September 30, 2011, 49 restricted stock units with vesting based on satisfaction of certain service and market conditions. For the three and nine months ended September 30, 2012, 209 restricted stock units with vesting based on satisfaction of certain service and market conditions.

 

  •  

For the three and nine months ended September 30, 2011 and 2012, 4,402 and 4,907 shares of Class B common stock, respectively, that may be issued in lieu of cash for the deferred payments related to the acquisition of Jingle using the “if converted” method. See Note 16 for further discussion.