Tucows 2013 Annual Report Download - page 96

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Year ended
December 31,
2013
Year ended
December 31,
2012
Year ended
December 31,
2011
Numerator for basic and diluted earnings per common share:
Net income for the year
$
4,180,464
$
4,424,142
$
6,170,231
Denominator for basic and diluted earnings per common share:
Basic weighted average number of common shares outstanding
10,468,250
11,458,216
13,363,669
Effect of stock options
813,159
825,520
573,690
Diluted weighted average number of shares outstanding
11,281,409
12,283,736
13,937,359
Basic earnings per common share
$
0.40
$
0.39
$
0.46
Diluted earnings per common share
$
0.37
$
0.36
$
0.44
Options to purchase 136,812 common shares were outstanding during 2013 (2012: 188,797; 2011: 787,188) but
were not included in the computation of diluted income per common share because the options’ exercise price was greater
than the average market price of the common shares. The options which expire in years 2018 to 2020 were still outstanding at
the end of 2013.
13. Commitments and contingencies:
(a) The Company has several non-cancelable lease and purchase obligations primarily for general office
facilities and equipment that expire over the next ten years. Future minimum payments under these agreements are as
follows:
2014
$
1,897,000
2015
1,518,000
2016
991,000
2017
919,000
2018
494,000
Thereafter
987,000
Rental expense under operating lease agreements was $0.8 million, $0.9 million and $0.9 million for the years ended
December 31, 2013, 2012 and 2011, respectively.
(b) In the normal course of its operations, the Company becomes involved in various legal claims and
lawsuits. The Company intends to vigorously defend these claims. While the final outcome with respect to any actions
outstanding or pending as of December 31, 2013 cannot be predicted with certainty, it is the opinion of management that
their resolution will not have a material adverse effect on the Company’s financial position.
14. Fair value measurement:
For financial assets and liabilities recorded in our financial statements at fair value we utilize a valuation hierarchy
for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad
levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are
quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either
directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs
are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A
financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant
to the fair value measurement.
F-24
The following table provides a summary of the fair values of the Company’s derivative instruments measured at fair
value on a recurring basis as at December 31, 2013:
December 31, 2013
Fair Value Measurement Using
Assets at
Level 1
Level 2
Level 3
Fair Value
Derivative instrument liability
$
—
$
491,098
$
—
$
491,098
Total Liabilities
$
—
$
491,098
$
—
$
491,098