Yahoo 2008 Annual Report Download - page 76

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Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
discussed above) will result in an expected adjustment of $0.02 on basic net income per share for the year ended
December 31, 2006, an expected adjustment of $0.01 on basic net income per share for the year ended
December 31, 2007, and an expected impact of $0.01 on diluted net income per share for the year ended
December 31, 2006. No impact is expected on basic net income per share for the year ended December 31, 2008.
No impact is expected on diluted net income per share for the years ended December 31, 2007 and 2008.
In November 2008, the FASB ratified the consensus reached by the EITF on Issue EITF No. 08-6, “Equity
Method Investment Accounting Considerations” (“EITF 08-6”), which clarifies the accounting for certain
transactions and impairment considerations involving equity method investments. The prospective provisions of
EITF 08-6 were effective for the Company on January 1, 2009. The adoption of EITF 08-6 is not expected to
have a material impact on the Company’s consolidated financial position, cash flows, or results of operations.
Note 2 B
ASIC AND
D
ILUTED
N
ET
I
NCOME
P
ER
S
HARE
Basic net income per share is computed using the weighted average number of common shares outstanding
during the period, excluding any unvested restricted stock awards that are subject to repurchase. Diluted net
income per share is computed using the weighted average number of common shares and, if dilutive, potential
common shares outstanding during the period. Potential common shares consist of unvested restricted stock and
restricted stock units, collectively referred to as “restricted stock awards” (using the treasury stock method), the
incremental common shares issuable upon the exercise of stock options (using the treasury stock method), and,
prior to April 1, 2008, the conversion of the Company’s Notes (using the if-converted method). In applying the
treasury stock method, the Company calculates potential tax windfalls and shortfalls by including the impact of
pro forma deferred tax assets.
The Company takes into account the effect on consolidated net income per share of dilutive securities of entities
in which the Company holds equity interests that are accounted for using the equity method.
For 2006, 2007, and 2008, potentially dilutive securities representing approximately 108 million, 128 million,
and 140 million shares of common stock, respectively, were excluded from the computation of diluted earnings
per share for these periods because their effect would have been anti-dilutive.
The following table sets forth the computation of basic and diluted net income per share (in thousands, except per
share amounts):
Years Ended December 31,
2006 2007 2008
Basic:
Numerator:
Net income for basic calculation ............................ $ 751,391 $ 660,000 $ 424,298
Denominator:
Weighted average common shares .......................... 1,393,424 1,342,754 1,370,898
Weighted average unvested restricted stock subject to
repurchase ........................................... (4,683) (3,767) (1,422)
Denominator for basic calculation .......................... 1,388,741 1,338,987 1,369,476
Net income per share—basic ............................... $ 0.54 $ 0.49 $ 0.31
70