FairPoint Communications 2010 Annual Report Download - page 114

Table of Contents
The following table provides a reconciliation of the common shares used for basic earnings per share and diluted earnings per share (in thousands):
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 
Weighted average number of common shares used for basic earnings per share 89,424 89,271
Effect of potential dilutive shares — —
Weighted average number of common shares and potential dilutive shares used for diluted earnings per share 89,424 89,271
Anti-dilutive shares excluded from the above reconciliation 983 2,750
As the Company incurred a loss for the years ended December 31, 2010 and 2009, all potentially dilutive securities are anti-dilutive and are, therefore,
excluded from the determination of diluted earnings per share.
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On March 31, 2008, FairPoint completed the acquisition of Spinco, pursuant to which Spinco merged with and into FairPoint, with FairPoint continuing
as the surviving corporation for legal purposes. In order to effect the Merger, the Company issued 53,760,623 shares of common stock, par value $.01 per
share, to Verizon stockholders for their interest in Spinco. At the time of the Merger, Legacy FairPoint had 35,264,945 shares of common stock outstanding.
Upon consummation of the Merger, the combined Company had 89,025,568 shares of common stock outstanding. At December 31, 2010, there were
89,440,334 shares of common stock outstanding and 200,000,000 shares of common stock were authorized.
As a result of the Chapter 11 Cases, on the Effective Date, the Old Common Stock was cancelled.
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Pursuant to the Plan, all outstanding equity interests of the Company, including but not limited to all outstanding shares of Common Stock, options and
contractual or other rights to acquire any equity interests, were cancelled and extinguished on the Effective Date.
Upon consummation of the Merger, the Company inherited several stock based compensation plans that had been adopted by Legacy FairPoint prior to the
Merger. As these plans were inherited on March 31, 2008, there is no impact reflected in the consolidated balance sheets or consolidated statements of
operations for periods prior to March 31, 2008.
Effective on January 1, 2006, the Company adopted the provisions of SFAS 123(R). At December 31, 2010, the Company had $0.3 million of total
unearned compensation cost related to non-vested share-based payment arrangements granted under the Company’s five stock-based compensation plans. That
cost was expected to be recognized over a weighted average period of 1.0 year, but was recognized in full as a component of reorganization costs on the Effective
Date. Compensation cost for awards is recognized on a straight-line basis over the requisite service period of each award. Any future share awards under any
of these plans will be made using newly issued shares. Amounts recognized in the financial statements with respect to these plans are as follows (in
thousands):
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Amounts charged against income, before income tax benefit $ 468 $ 2,052 $ 4,408
Amount of related income tax benefit recognized in income (188) (825) (1,758)
Total net income impact $ 280 $ 1,227 $ 2,650
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