Shutterfly 2007 Annual Report Download - page 63

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Table of Contents
SHUTTERFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts) — (Continued)
Net Income (Loss) Per Share
Basic net income (loss) per share attributed to common shares is computed by dividing the net income (loss) attributable to common shares
for the period by the weighted average number of common shares outstanding during the period as reduced by the weighted average unvested
common shares subject to repurchase by the Company. Net income (loss) available to common stockholders is calculated using the two class
method as the net income (loss) less preferred stock dividends for the period and amounts allocated to preferred stock to reflect the rights of the
preferred stock to receive dividends in preference to common stock.
Diluted net income (loss) per share attributed to common shares is computed by dividing the 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, if the effect of
each class of potential common shares is dilutive. Potential common shares include restricted common stock, common stock subject to
repurchase rights, and incremental shares of common stock issuable upon the exercise of stock options and warrants and upon conversion of
preferred stock.
58
Year Ended December 31,
2006
2005
2004
Historical net income per share:
Numerator
Net income before cumulative effect of change in accounting principle
$
5,798
$
28,490
$
3,709
Cumulative effect of change in accounting principle
442
Net income
5,798
28,932
3,709
Income allocable to preferred stockholders
(
24,212
)
(3,709
)
Net income allocable to common stockholders
$
5,798
$
4,720
$
Denominator
Weighted
-
average common shares outstanding
8,729
3,619
2,904
Less: Weighted
-
average unvested common shares subject to repurchase
(107
)
(364
)
(673
)
Denominator for basic net income per share
8,622
3,255
2,231
Dilutive effect of stock options and shares subject to repurchase
1,709
1,307
Dilutive effect of outstanding preferred stock warrants
47
Denominator for diluted net income per share
10,331
4,609
2,231
Net income per share
basic and diluted
Before cumulative effect of change in accounting principle
$
0.67
$
1.31
$
Cumulative effect of change in accounting principle
0.14
Net income per share
basic
$
0.67
$
1.45
$
Net income per share
diluted
$
0.56
$
1.02
$