Redbox 2006 Annual Report Download - page 69

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COINSTAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
During 2006, we performed a study of our state net operating losses and a study of our qualifying research
and development credits. As a result of these studies, we adjusted the carrying amount of the related deferred tax
balances resulting in a charge of $1.1 million and a benefit of $1.0 million, respectively.
The income tax benefit from stock option exercises in excess of the amounts recognized in the consolidated
statements of operations as of December 31, 2006, 2005 and 2004 that was credited to common stock was
approximately $1.0 million, $1.0 million and $1.6 million, respectively. For the year ended December 31, 2006,
there was zero income tax benefit from stock compensation expense in excess of the amounts recognized for
financial reporting purposes.
NOTE 11: INCOME PER SHARE
Basic net income per share is computed by dividing the net income available to common stockholders for
the period by the weighted average number of common shares outstanding during the period. Diluted net income
per share is computed by dividing the net income for the period by the weighted average number of common and
potential common shares outstanding (if dilutive) during the period. Potential common shares, composed of
incremental common shares issuable upon the exercise of stock options and warrants, are included in the
calculation of diluted net income per share to the extent such shares are dilutive.
The following table sets forth the computation of basic and diluted net income per share for the periods
indicated:
Year ended December 31,
2006 2005 2004
(in thousands)
Numerator:
Net income .................................................... $18,627 $22,272 $20,368
Denominator:
Weighted average shares for basic calculation ........................ 27,686 25,767 21,626
Incremental shares from employee stock options .................. 342 266 333
Weighted average shares for diluted calculation ........................... 28,028 26,033 21,959
For the years ended December 31, 2006, 2005 and 2004, options and restricted stock awards totaling
1.0 million, 1.2 million and 1.3 million shares of common stock, respectively, were excluded from the
computation of net income per common share because their impact would be antidilutive.
NOTE 12: RETIREMENT PLAN
In July 1995, we adopted a tax-qualified employee savings and retirement plan under Section 401(k) of the
Internal Revenue Code of 1986 for all employees who satisfy the age and service requirements under this plan.
This plan is funded by voluntary employee salary deferral of up to 60% of annual compensation (subject to the
Federal limitation) and a safe harbor employer match equaling 100% of the first 3% and 50% of the 4th and 5th
percent. Additionally, all participating employees are 100% vested for all Coinstar matched contributions. We
contributed $920,000, $841,000 and $787,000 to the plan for the years ended December 31, 2006, 2005 and
2004, respectively.
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