Stamps.com 2009 Annual Report Download - page 61

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TABLE OF CONTENTS
STAMPS.COM INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies – (continued)
General and Administrative
General and administrative expense principally consists of compensation and related costs for executive and administrative
personnel, fees for legal and other professional services, depreciation of equipment and software used for general corporate
purposes and amortization of intangible assets.
Net Income per Share
Net income per share represents net income attributable to common stockholders divided by the weighted average number of
common shares outstanding during a reported period. The diluted net income per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock, including stock options, were exercised or converted into common
stock. Diluted net income per share is calculated by dividing net income during a reported period by the sum of the weighted
average number of common shares outstanding plus common stock equivalents for the period. The following table reconciles
share amounts utilized to calculate basic and diluted net income per share (in thousands, except per share data):
The calculation of dilutive shares excludes the effect of the following options that are considered anti-dilutive (in thousands):
Year Ended December 31,
2009
2008
2007
Net income
$
6,177
$
10,164
$
10,666
Basic – weighted average common shares
16,238
19,081
20,815
Dilutive effect of common stock equivalents
131
264
379
Dilutive – weighted average common shares
16,369
19,345
21,194
Net income per share:
Basic
$
0.38
$
0.53
$
0.51
Diluted
$
0.38
$
0.53
$
0.50
Stock-Based Compensation
We estimate the fair value of share-based payment awards on the date of grant using an option-pricing model and recognize
stock-based compensation expense during each period based on the value of that portion of share-based payment awards that is
ultimately expected to vest during the period, reduced for estimated forfeitures. We estimate forfeitures at the time of grant based
on historical data and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Compensation
expense recognized for all employee stock options granted is recognized using the straight-line method over their respective
vesting periods of three to five years.
Year Ended December 31,
2009
2008
2007
Anti-dilutive stock options shares
2,677
2,642
2,230
F-10