Support.com 2006 Annual Report Download - page 58

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SUPPORTSOFT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 1. Organization and Summary of Significant Accounting Policies (Continued)
Net Income (Loss) Per Share
Basic and diluted net income (loss) per share are presented in conformity with the Financial Accounting Standards Board’s
(“FASB”) Statement of Financial Accounting Standards No. 128, “Earnings Per Share” (“FAS 128”), for all periods presented. Basic
net income (loss) per share is computed using net income (loss) and the weighted average number of common shares outstanding
during the reporting period. Diluted net income (loss) per share is computed using net income and the weighted average number of
common shares outstanding, including the effect from the potential issuance of common stock such as stock issuable pursuant to the
exercise of stock options using the treasury stock method when dilutive.
The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share
amounts):
Year Ended December 31,
2006 2005 2004
Net income (loss) $ (8,235) $ 4,425 $ 10,154
Basic:
Weighted−average shares of common stock
outstanding 44,113 43,032 42,355
Shares used in computing basic net income
per share 44,113 43,032 42,355
Basic net income (loss) per share $ (0.19) $ 0.10 $ 0.24
Diluted:
Weighted−average shares of common stock
outstanding 44,113 43,032 42,355
Add: Common equivalent shares
outstanding — 1,487 3,235
Shares used in computing diluted net
income per share 44,113 44,519 45,590
Diluted net income (loss) per share $ (0.19) $ 0.10 $ 0.22
In 2006, SupportSoft has not included the effect from the potential issuance of common stock as a result of the exercise of stock
options as the issuance of these shares would be anti−dilutive due to the net loss incurred in the current period.
Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss relate entirely to accumulated foreign currency translation losses and
unrealized losses on available−for−sale securities. Accumulated currency translation losses were $697,000 and $528,000 as of
December 31, 2006 and 2005, respectively, and accumulated unrealized losses on available−for−sale securities were $54,000 and
$117,000 as of December 31, 2006 and 2005, respectively.
Stock−Based Compensation
On January 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share−Based
Payment,” (“SFAS 123R”) which requires the measurement and recognition of compensation expense for all stock−based payment
awards, including employee stock options and
54
Source: SUPPORTSOFT INC, 10−K, March 16, 2007