Priceline 2014 Annual Report Download - page 102

The Company records a provision for uncollectible agency commissions, principally receivables from accommodations related to
agency reservations. The Company also accrues for costs associated with merchant transactions made on its websites by individuals using
fraudulent credit cards and for other amounts "charged back" as a result of payment disputes. Changes in accounts receivable reserves consisted
of the following (in thousands):
The Company computes basic net income per share by dividing net income by the weighted average number of common shares
outstanding during the period. Diluted net income per share is based upon the weighted average number of common and common equivalent
shares outstanding during the period.
Common equivalent shares related to stock options, restricted stock, restricted stock units, and performance share units are calculated
using the treasury stock method. Performance share units are included in the weighted average common equivalent shares based on the number
of shares that would be issued if the end of the reporting period were the end of the performance period, if the result would be dilutive.
The Company's convertible debt issues have net share settlement features requiring the Company upon conversion to settle the
principal amount of the debt for cash and the conversion premium for cash or shares of the Company's common stock at the Company's option.
The convertible notes are included in the calculation of diluted net income per share if their inclusion is dilutive under the treasury stock method.
A reconciliation of the weighted average number of shares outstanding used in calculating diluted earnings per share is as follows (in
thousands):
Anti-dilutive potential common shares for the years ended December 31, 2014 , 2013 and 2012 include approximately 2.1 million
shares, 2.0 million shares and 2.0 million shares, respectively, that could be issued under the Company's convertible notes if the Company
experiences substantial increases in its common stock price. Under the treasury stock method, the convertible notes will generally have a
dilutive impact on net income per share if the Company's average stock price for the period exceeds the conversion price for the convertible
notes.
In 2006, the Company issued $172.5 million aggregate principal amount of convertible notes due September 30, 2013 (the "2013
Notes"). In 2006, the Company also entered into hedge transactions (the "Conversion Spread Hedges") relating to the potential dilution of the
Company's common stock upon conversion of the 2013 Notes at their stated maturity date. The Conversion Spread Hedges were settled in
October 2013 and the Company received 42,160 shares of common stock from the counterparties. The settlement was accounted for as an equity
transaction. Since the impact of the Conversion Spread Hedges
97
6.
ACCOUNTS RECEIVABLE RESERVES
For the Year Ended December 31,
2014 2013 2012
Balance, beginning of year
$
14,116
$
10,322
$
6,103
Provision charged to expense
22,990
16,451
16,094
Charge-offs and adjustments
(21,546
)
(13,072
)
(11,977
)
Currency translation adjustments
(1,348
)
415
102
Balance, end of year
$
14,212
$
14,116
$
10,322
7.
NET INCOME PER SHARE
For the Year Ended December 31,
2014 2013 2012
Weighted average number of basic common shares outstanding
52,301
50,924
49,840
Weighted average dilutive stock options, restricted stock units and
performance share units
340
382
501
Assumed conversion of Convertible Senior Notes
382
1,107
985
Weighted average number of diluted common and common equivalent
shares outstanding
53,023
52,413
51,326
Anti-dilutive potential common shares
2,574
2,384
2,202