Redbox 2008 Annual Report Download - page 76

In 2006, the indefinite reversal criteria of Accounting Principle Board Opinion No. 23, Accounting for Income
Taxes — Special Areas (“APB 23”) in which the earnings of our foreign operations excluding Canada are
permanently reinvested outside of the United States was met. As such, United States deferred taxes will not be
provided on these earnings. United States deferred taxes previously recorded on foreign earnings were reversed,
which resulted in a $1.5 million tax benefit in 2006. It is not practicable to determine the United States deferred
taxes associated with foreign earnings that are indefinitely reinvested.
During 2006, studies were conducted of accumulated state net operating loss carryforwards and of qualified
research and development expenditures used in computing the research and development tax credit. 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, 2007 and 2006 that was credited to common stock was approximately
$0.6 million and $1.0 million, respectively. There was no income tax benefit from stock option exercises in excess
of the amounts recognized in the consolidated statements of operations in December 31, 2008.
NOTE 12: NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed by dividing the net income (loss) available to common
stockholders for the period by the weighted average number of common shares outstanding during the period.
Diluted net income (loss) per share is computed by dividing the net income (loss) 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 (loss) per share to the extent such shares are dilutive.
The following table sets forth the computation of basic and diluted net income (loss) per share for the periods
indicated:
2008 2007 2006
Year Ended December 31,
(In thousands)
Numerator:
Net income (loss) ................................ $14,112 $(22,253) $18,627
Denominator:
Weighted average shares for basic calculation ............ 28,041 27,805 27,686
Incremental shares from employee stock options and
awards ....................................... 423 — 342
Weighted average shares for diluted calculation .......... 28,464 27,805 28,028
For the years ended December 31, 2008, 2007 and 2006, options and restricted stock awards totaling
1.1 million, 0.8 million and 1.0 million shares of common stock, respectively, were excluded from the computation
of net income per common share because their impact would be antidilutive.
NOTE 13: 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
$1.1 million, $1.1 million and $0.9 million to the plan for the years ended December 31, 2008, 2007 and 2006,
respectively.
We also maintain a 401(k) profit sharing plan, which covers substantially all of the employees of our
entertainment services subsidiaries. Employees are permitted to contribute up to 60% of their eligible
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