Rosetta Stone 2011 Annual Report Download - page 100

Table of Contents
ROSETTA STONE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Income Per Share
Net income (loss) per share is computed under the provisions of Accounting Standards Codification topic 260, Earnings Per Share. Basic income per
share is computed using net income (loss) and the weighted average number of shares of common stock outstanding. Diluted earnings per share reflect the
weighted average number of shares of common stock outstanding plus any potentially dilutive shares outstanding during the period. Potentially dilutive shares
consist of shares issuable upon the exercise of stock options, restricted stock awards, restricted stock units and conversion of shares of preferred stock.
Common stock equivalent shares are excluded from the diluted computation if their effect is anti-dilutive.
The following table sets forth the computation of basic and diluted net income per common share:
Year Ended December 31,
2011 2010 2009
(dollars in thousands, except per
share amounts)
Numerator:
Net Income (loss) $ (19,988) $ 13,284 $ 13,363
Denominator:
Weighted average number of common shares:
Basic 20,773 20,439 14,990
Diluted 20,773 21,187 19,930
Income (loss) per common share:
Basic $ (0.96) $ 0.65 $ 0.89
Diluted $ (0.96) $ 0.63 $ 0.67
The following table sets forth common stock equivalent shares included in the calculation of the Company's diluted net income (loss) per share (in
thousands):
Year Ended
December 31,
2011 2010 2009
Equity Instruments:
Convertible preferred stock — — 4,134
Restricted common stock units — 11 7
Restricted common stock — 86 93
Stock options — 651 706
Total common stock equivalent shares — 748 4,940
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