Incredimail 2012 Annual Report Download - page 108

PERION NETWORK LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
The Company's agreements with employees in Israel, joining the Company since February 2, 2008, are in accordance with
section 14 of the Severance Pay Law, 1963, where the Company's contributions for severance pay shall be instead of its
severance liability. Upon contribution of the full amount of the employee's monthly salary, and release of the policy to the
employee, no additional calculations shall be conducted between the parties regarding the matter of severance pay and no
additional payments shall be made by the Company to the employee. Further, the related obligation and amounts
deposited on behalf of such obligation are not stated on the balance sheet, as they are legally released from obligation to
employees once the deposit amounts have been paid.
Severance expenses for the years ended December 31, 2010, 2011 and 2012 amounted to $ 786, $ 586 and $ 589,
respectively.
Basic net earnings per Ordinary shares are computed based on the weighted average number of Ordinary shares
outstanding during each year. Diluted net earnings per Ordinary share are computed based on the weighted average
number of Ordinary shares outstanding during each year, plus dilutive potential Ordinary shares considered outstanding
during the year, in accordance with ASC 260, "Earnings Per Share".
The weighted average number of Ordinary shares related to the outstanding options excluded from the calculations of
diluted net earnings per Ordinary share, as these securities are anti-
dilutive, was 922,069, 1,266,919 and 1,315,106 for the
years ended December 31, 2010, 2011 and 2012, respectively.
The Company accounts for stock-based compensation under ASC 718, "Compensation -
Stock Compensation", which
requires the measurement and recognition of compensation expense based on estimated fair values for all share-
based
payment awards made to employees and directors.
ASC 718 requires companies to estimate the fair value of equity-
based payment awards on the date of grant using an
option-
pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense
over the requisite service periods in the Company's consolidated statement of income. ASC No. 718 requires forfeitures to
be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those
estimates.
The Company recognizes compensation expenses for the value of its awards, which have graded vesting based on service
conditions, using the straight line method, over the requisite service period of each of the awards, net of estimated
forfeitures. Estimated forfeitures are based on actual historical pre-vesting forfeitures.
NOTE 2:
-
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
p.
Net earnings per Ordinary share:
q.
Accounting for stock
-
based compensation:
F
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