Stamps.com 2014 Annual Report Download - page 70

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STAMPS.COM INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Net Income per Share
Net income per share represents net income attributable to common stockholders divided by the weighted average number of common shares
outstanding during a reported period. The diluted net income per share reflects the potential dilution that could occur if securities or other
contracts to issue common stock, including stock options (commonly and hereafter referred to as “common stock equivalents”), were exercised
or converted into common stock. Diluted net income per share is calculated by dividing net income during a reported period by the sum of the
weighted average number of common shares outstanding plus common stock equivalents for the period.
The following table reconciles share amounts utilized to calculate basic and diluted net income per share (in thousands, except per share data):
The calculation of dilutive shares excludes the effect of the following options that are considered anti-dilutive (in thousands):
Stock-Based Compensation
We estimate the fair value of share-based payment awards on the date of grant using an option-pricing model and recognize stock-based
compensation expense during each period based on the value of that portion of share-based payment awards that is ultimately expected to vest
during the period, reduced for estimated forfeitures. We estimate forfeitures at the time of grant based on historical data and revise, if necessary,
in subsequent periods if actual forfeitures differ from those estimates. Compensation expense recognized for all employee stock options granted
is recognized using the straight-line method over their respective vesting periods of three to five years.
F-13
Table of Contents
Year Ended December 31,
2014
2013
2012
Net income
36,882
$
44,153
$
38,557
Basic
-
weighted average common shares
16,011
15,691
16,079
Dilutive effect of common stock equivalents
406
607
714
Diluted - weighted average common shares
16,417
16,298
16,793
Net income per share:
Basic
2.30
$
2.81
$
2.40
Diluted
2.25
$
2.71
$
2.30
Year ended December 31,
2014
2013
2012
Anti-dilutive stock option shares
134
65
119