XM Radio 2012 Annual Report Download - page 101

SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(3) Earnings per Share
We utilize the two-class method of calculating basic net income per common share, as our Series B Preferred
Stock are considered participating securities. Basic net income per common share is calculated by dividing income
available to common stockholders by the weighted average common shares outstanding during each reporting period.
Diluted net income per common share adjusts the weighted average common shares outstanding for the potential
dilution that could occur if common stock equivalents (convertible debt and preferred stock, warrants, stock options,
restricted stock and restricted stock units) were exercised or converted into common stock, calculated using the
treasury stock method. Common stock equivalents of approximately 147,125,000, 419,752,000 and 689,922,000 for
the years ended December 31, 2012, 2011 and 2010, respectively, were excluded from the calculation of diluted net
income per common share as the effect would have been anti-dilutive.
For the Years Ended December 31,
(in thousands, except per share data) 2012 2011 2010
Numerator:
Net income .................................................. $3,472,702 $ 426,961 $ 43,055
Less:
Allocation of undistributed income to Series B Preferred Stock ....... (1,084,895) (174,449) (17,735)
Dividends paid to preferred stockholders ......................... (64,675) — —
Net income available to common stockholders for basic net income per
common share .............................................. 2,323,132 252,512 25,320
Add back:
Allocation of undistributed income to Series B Preferred Stock ....... 1,084,895 174,449 17,735
Dividends paid to preferred stockholders ......................... 64,675 — —
Effect of interest on assumed conversions of convertible debt ........ 38,500 — —
Net income available to common stockholders for diluted net income per
common share .............................................. $3,511,202 $ 426,961 $ 43,055
Denominator:
Weighted average common shares outstanding for basic net income per
common share .............................................. 4,209,073 3,744,606 3,693,259
Weighted average impact of assumed Series B Preferred Stock
conversion ............................................... 2,215,900 2,586,977 2,586,977
Weighted average impact of assumed convertible debt .............. 298,725 — —
Weighted average impact of other dilutive equity instruments ........ 150,088 169,239 110,835
Weighted average shares for diluted net income per common share ...... 6,873,786 6,500,822 6,391,071
Net income per common share:
Basic ..................................................... $ 0.55 $ 0.07 $ 0.01
Diluted ................................................... $ 0.51 $ 0.07 $ 0.01
We identified and corrected an immaterial error affecting the historical presentation of basic earnings per share.
The adjustment reflects the Series B Preferred Stock held by an affiliate of Liberty Media as participating securities as
the holder of such preferred stock may participate in dividends and distributions ratably with the holders of our
common stock on an as-converted basis. Net income per common share-basic for the year ended December 31, 2011
was previously reported as $0.11 and has been adjusted to be $0.07. There was no impact on the previously reported
net income per common share-basic for the year ended December 31, 2010 and there was no impact on the previously
reported diluted earnings per share for any period presented. The effects of the error were not material to any
previously reported quarterly or annual period. The related corrections are reflected in the applicable prior periods.
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