XO Communications 2009 Annual Report Download - page 69

known to the Company, the Company believes that such an event is not probable of occurring in the
foreseeable future.
13. STOCKHOLDERS’ EQUITY
Warrants
As of December 31, 2009, the Company had warrants outstanding which allowed the holders to purchase up to
an additional 23.7 million shares of the Company’s common stock. The warrants consisted of:
• Series A warrants to purchase 9.5 million shares of the Company’s common stock at an exercise price
of $6.25 per share;
• Series B warrants to purchase 7.1 million shares of the Company’s common stock at an exercise price
of $7.50 per share; and
• Series C warrants to purchase 7.1 million shares of the Company’s common stock at an exercise price
of $10.00 per share.
The warrants were valued at issuance at $44.9 million using the Black-Scholes-Merton pricing model. As of
January 16, 2010, substantially all of the warrants expired unexercised.
Universal Shelf Registration Statement
On January 18, 2008, the Company’s Universal Shelf Registration Statement on Form S-3 (SEC File
No. 333-147643) became effective. The Registration Statement registers up to $900 million of the Company’s
common stock, preferred stock, rights to purchase common stock, depositary receipts, warrants, debt securities,
guarantees of debt securities or units that the Company or its subsidiaries may offer from time to time. As of
March 31, 2010, the Company is not eligible to conduct primary offerings of its securities under its S-3
Registration Statement because the aggregate market value of its voting and non-voting common equity held
by non-affiliates of the Company is less than $75 million. While the Company’s equity held by non affiliates
remains under $75 million, only non convertible debt with an investment grade rating may be offered under
this S-3. The Registration Statement identifies certain of XOH’s direct or indirect wholly owned subsidiaries
as potential guarantors of the debt securities that may be issued pursuant to the Registration Statement. The
Company’s financial statements do not include separate financial statements for any of these subsidiaries
because the subsidiaries do not have any independent assets or operations, any such guarantees are full and
unconditional and joint and several, and XOH’s only subsidiaries that are not named in the Registration
Statement are considered to be minor.
Earnings (Loss) Per Share
Net income (loss) per common share, basic is computed by dividing net income (loss) allocable to common
shareholders by the weighted average common shares outstanding during the period. Net income (loss) per
common share, diluted is calculated by dividing net income (loss) allocable to common shareholders by the
weighted average common shares outstanding adjusted for the dilutive effect of common stock equivalents
related to stock options, warrants and preferred stock. In periods where the assumed common stock equivalents
for stock options, warrants, and preferred stock are anti-dilutive, they are excluded from the calculation of
diluted weighted average shares.
The table below details the anti-dilutive items that were excluded in the computation of net loss per common
share, diluted for the years ended December 31, (in millions):
2009 2008 2007
Stock options ............................................... 7.4 9.0 9.6
Warrants .................................................. 23.7 23.7 23.7
Class A preferred stock ....................................... 55.2 56.3 53.0
Class B convertible preferred stock ............................... 408.9 381.5 —
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