Enom 2010 Annual Report Download - page 115

Table of Contents
Demand Media, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Continued)
(In thousands, except per share amounts)
2. Summary of Significant Accounting Policies (Continued)
technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the
largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties accrued related to
unrecognized tax benefits in its income tax (benefit) provision in the accompanying statements of operations.
Net Loss Per Share
Basic loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares
outstanding during the period. Net loss attributable to common stockholders is increased for cumulative preferred stock dividends earned during the period.
Diluted loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average common shares outstanding plus
potentially dilutive common shares. Because the Company reported losses for the periods presented, all potentially dilutive common shares comprising of
stock options, RSPRs, restricted stock units and awards, warrants and convertible preferred stock are antidilutive.
RSPRs and restricted stock units and awards are considered outstanding common shares and included in the computation of basic earnings per share as of
the date that all necessary conditions of vesting are satisfied. RSPRs and restricted stock units are excluded from the dilutive earnings per share calculation
when their impact is antidilutive. Prior to satisfaction of all conditions of vesting, unvested RSPRs are considered contingently issuable shares and are
excluded from weighted average common shares outstanding.
Foreign Currency Transactions
Foreign currency transaction gains and losses are charged or credited to earnings as incurred. For the years ended December 31, 2008, 2009 and 2010,
the Company recorded a loss of $342, a gain of $52 and a loss of $44, respectively, in other income (expense) in the accompanying statements of operations
associated with foreign currency transactions.
Foreign Currency Translation
The financial statements of foreign subsidiaries are translated into U.S. dollars. Where the functional currency of a foreign subsidiary is its local
currency, balance sheet accounts are translated at the current exchange rate and income statement items are translated at the average exchange rate for the
period. Gains and losses resulting from translation are accumulated in accumulated other comprehensive earnings (loss) within stockholders' deficit.
Fair Value of Financial Instruments
Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures its
financial assets and liabilities in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to
determine fair value.
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