Enom 2014 Annual Report Download - page 80

F-16
Net Income (Loss) Per Share
Basic net income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the
weighted average number of common shares outstanding during the period. Net income (loss) attributable to common stockholders is
increased for cumulative preferred stock dividends earned during the period. Diluted net income (loss) per share is computed by
dividing the net income (loss) attributable to common stockholders by the weighted average common shares outstanding plus
potentially dilutive common shares. RSUs and other restricted awards are considered outstanding common shares and included in the
computation of basic income (loss) per share as of the date that all necessary conditions of vesting are satisfied. RSUs, stock options
and stock issued pursuant to the ESPP are excluded from the diluted net income (loss) per share calculation when their impact is
antidilutive. We reported a net loss for the years ended December 31, 2014 and 2013, and as a result, all potentially dilutive common
shares are considered antidilutive for these periods.
Foreign Currency Transactions
Foreign currency transaction gains and losses are charged or credited to earnings as incurred. For the years ended December 31,
2014, 2013 and 2012, foreign currency transaction gains and losses that are included in other income (expense) in the accompanying
statements of operations were not significant.
Foreign Currency Translation
The financial statements of foreign subsidiaries are translated into U.S. dollars. Where the functional currency of a foreign
subsidiary is its local currency, balance sheet accounts are translated at the current exchange rate and income statement items are
translated at the average exchange rate for the period. Gains and losses resulting from translation are accumulated in accumulated
other comprehensive earnings within stockholders’ equity.
Fair Value of Financial Instruments
We chose not to elect the fair value option for our financial assets and liabilities that had not been previously carried at fair
value. Therefore, material financial assets and liabilities not carried at fair value, such as trade accounts receivable and payables, are
reported at their carrying values.
The carrying amounts of our financial instruments, including cash and cash equivalents, accounts receivable, restricted cash,
accounts payable, accrued liabilities and customer deposits approximate fair value because of their short maturities. For our term loans
and revolving loan facility, the carrying amounts approximate fair value because they bear interest at variable rates that approximate
fair value. Our investments in marketable securities are recorded at fair value. Certain assets, including equity investments,
investments held at cost, goodwill and intangible assets are also subject to measurement at fair value on a nonrecurring basis, if they
are deemed to be impaired as the result of an impairment review. (Refer to Note 13 for additional information).
Discontinued Operations
We report the results of operations of a business as discontinued operations if the disposal of a component represents a strategic
shift that has (or will have) a major effect on an entity’s operations and financial results. The results of discontinued operations are
reported in net income (loss) from discontinued operations in the unaudited consolidated statements of operations for current and prior
periods commencing in the period in which the business meets the criteria of a discontinued operation, and include any gain or loss
recognized on closing or adjustment of the carrying amount to fair value less cost to sell. The financial results of Rightside are
presented as discontinued operations in our accompanying consolidated statements of operations for the years ended December 31,
2014, 2013 and 2012. (Refer to Note 14 for additional information).
Our policy for discontinued operations reflects a revised standard on reporting discontinued operations and disclosures of
disposals of components of an entity issued by the Financial Accounting Standards Board in April 2014, which changed the criteria
for reporting a discontinued operation. The revised standard applies prospectively to new disposals and new held-for-sale
classifications of components of an entity that occur after the date of adoption. We elected to early adopt the standard in the second
quarter of 2014. Accordingly, under the guidelines of the revised standard, the operations of our Creativebug and CoveritLive
businesses, which we classified as held-for-sale in the second quarter of 2014, were not reported as discontinued operations because
we concluded that they were not individually significant components of our operations and therefore did not meet the definition of a
discontinued operation under the new guidance. We sold our Creativebug business in July 2014 and received $10.0 million in cash,
inclusive of $1.0 million held in escrow for one year from the closing date as a holdback amount to cover indemnity claims, resulting
in a gain on sale of $0.2 million. We also sold our CoveritLive business in July 2014 and received $4.5 million of cash and promissory
note with a principal amount of $5.6 million, resulting in a gain on sale of $0.6 million. Under our prior accounting policy for