TripAdvisor 2013 Annual Report Download - page 94

Diluted Earnings Per Share
We compute diluted earnings per share by dividing net income attributable to TripAdvisor by the sum of the
weighted average number of common and common equivalent shares outstanding during the period. We
computed the weighted average number of common and common equivalent shares outstanding during the period
using the sum of (i) the number of shares of common stock and Class B common stock used in the basic earnings
per share calculation as indicated above, and (ii) if dilutive, the incremental weighted average common stock that
we would issue upon the assumed exercise of outstanding common equivalent shares related to stock options,
stock warrants and the vesting of restricted stock units using the treasury stock method, and (iii) if dilutive,
performance based awards based on the number of shares that would be issuable as of the end of the reporting
period assuming the end of the reporting period was also the end of the contingency period.
We treated all outstanding equity awards assumed at Spin-Off as if they were granted as of the Spin-Off and
we included them in our diluted earnings per share calculation for the year ended December 31, 2011, based on
the number of days they were outstanding.
Under the treasury stock method, the assumed proceeds calculation includes the actual proceeds to be
received from the employee upon exercise, the average unrecognized compensation cost during the period and
any tax benefits credited upon exercise to additional paid-in-capital. The treasury stock method assumes that a
company uses the proceeds from the exercise of an award to repurchase common stock at the average market
price for the period. Windfall tax benefits created upon the exercise of an award would be added to assumed
proceeds, while shortfalls charged to additional paid-in-capital would be deducted from assumed proceeds. Any
shortfalls not covered by the windfall tax pool would be charged to the income statement and would be excluded
from the calculation of assumed proceeds, if any.
Below is a reconciliation of the weighted average number of shares of common stock outstanding in
calculating diluted earnings per share (in thousands, except for per share information) for the periods presented:
Year Ended December 31,
2013 2012 2011
Numerator:
Net income attributable to TripAdvisor, Inc. .... $205,443 $194,069 $177,677
Denominator:
Weighted average shares used to compute Basic
EPS .................................. 142,854 139,462 133,461
Effect of dilutive securities:
Stock options ........................ 2,131 1,207 1,164
RSUs ............................... 278 161 240
Stock warrants ....................... — 511 —
Weighted average shares used to compute
Diluted EPS ........................... 145,263 141,341 134,865
Basic EPS ................................... $ 1.44 $ 1.39 $ 1.33
Diluted EPS ................................. $ 1.41 $ 1.37 $ 1.32
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