Priceline 2015 Annual Report Download - page 104

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6. ACCOUNTS RECEIVABLE RESERVES
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):
For the Year Ended December 31,
2015
2014
2013
Balance, beginning of year $ 14,212
$ 14,116
$ 10,322
Provision charged to expense 24,324
22,990
16,451
Charge-offs and adjustments (22,682)
(21,546)
(13,072)
Currency translation adjustments (840)
(1,348)
415
Balance, end of year $ 15,014
$ 14,212
$ 14,116
7. NET INCOME PER SHARE
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 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):
For the Year Ended December 31,
2015
2014
2013
Weighted average number of basic common shares outstanding 50,940
52,301
50,924
Weighted average dilutive stock options, restricted stock units and performance
share units 395
340
382
Assumed conversion of Convertible Senior Notes 258
382
1,107
Weighted average number of diluted common and common equivalent shares
outstanding 51,593
53,023
52,413
Anti-dilutive potential common shares 2,563
2,574
2,384
Anti-dilutive potential common shares for the years ended December 31, 2015 , 2014 and 2013 include approximately 2.1 million shares, 2.1 million
shares and 2.0 million shares, respectively, that could be issued under the Company's outstanding convertible notes. Under the treasury stock method, the
convertible notes will generally have an anti-dilutive impact on net income per share if the conversion prices for the convertible notes exceed the Company's
average stock price.
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
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