Overstock.com 2008 Annual Report Download - page 94

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Table of Contents
Earnings (loss) per share
In accordance with SFAS 128, Earnings per share, basic earnings (loss) per share is computed by dividing net income (loss)
attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings
(loss) per share is computed by dividing net income (loss) attributable to common shares for the period by the weighted average
number of common and potential common shares outstanding during the period. Potential common shares, comprising incremental
common shares issuable upon the exercise of stock options, warrants, convertible senior notes, restricted stock units and shares under
the Performance Share Plan, are included in the calculation of diluted earnings (loss) per share to the extent such shares are dilutive.
The following table sets forth the computation of basic and diluted earnings (loss) per share for the periods indicated (in
thousands):
Years ended December 31,
2006 2007 2008
Loss from continuing operations $ (99,880) $ (44,112) $ (12,658)
Deemed dividend related to redeemable common stock (99) — —
Loss from continuing operations attributable to common
shares (99,979) (44,112) (12,658)
Loss from discontinued operations (6,882) (3,924) —
Net loss attributable to common shares $ (106,861) $ (48,036) $ (12,658)
Weighted average common shares outstanding—basic 20,332 23,704 22,901
Effect of dilutive securities:
Stock options and restricted units — — —
Convertible senior notes — — —
Shares under the Performance Share Plan — — —
Restricted stock units — — —
Weighted average common shares outstanding—diluted 20,332 23,704 22,901
Net loss per common share—basic and diluted:
Loss from continuing operations $ (4.91) $ (1.86) $ (0.55)
Loss from discontinued operations $ (0.34)$ (0.17)$ —
Net loss per common share—basic and diluted $ (5.25)$ (2.03)$ (0.55)
The shares issuable related to stock options, restricted stock units, convertible senior notes outstanding and the Performance
Share Plan were not included in the computation of diluted earnings per share because to do so would have been antidilutive. The
number of shares issuable related to stock options outstanding was 1.0 million shares, 1.2 million shares and 974,000 shares for 2006,
2007 and 2008, respectively. As of December 31, 2008, the Company had $67.5 million of convertible senior notes outstanding (see
"Note 13 – "Borrowings" – "3.75% Convertible Senior Notes"), which could potentially convert into 885,000 shares of common stock
in the aggregate.
Recent accounting pronouncements
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
("SFAS No. 159"). Under SFAS No. 159, companies may elect to measure certain financial instruments and certain other items at fair
value. The standard requires that unrealized gains and losses on items for which the fair value option has been elected be reported in
earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company adopted SFAS No. 159 on
F-15