Yahoo 2009 Annual Report Download - page 78

Yahoo! Inc.
Notes to Consolidated Financial Statements—(Continued)
Note 2 B ASIC AND D ILUTED N ET I NCOME A TTRIBUTABLE TO Y AHOO !C OMMON S TOCKHOLDERS P ER
S HARE
Basic and diluted net income per share attributable to Yahoo! common stockholders is computed using the
weighted average number of common shares outstanding during the period, excluding net income attributable to
participating securities (restricted stock awards granted under the Company’s 1995 Stock Plan and restricted
stock units granted under the 1996 Directors’ Stock Plan (the “Directors’ Plan”)) in accordance with authoritative
guidance which became effective January 1, 2009 for stock-based awards with non-forfeitable rights to
dividends. Accordingly, all prior period earnings per share have been adjusted. 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 are calculated using the treasury stock method and
consist of unvested restricted stock, shares underlying unvested restricted stock units, the incremental common
shares issuable upon the exercise of stock options, and shares to be purchased under the employee stock purchase
plan. In addition, potential common shares issuable upon an assumed conversion of the outstanding Notes prior
to their maturity and conversion on April 1, 2008 were calculated using the “as if” converted method. These
potential common shares were excluded from the denominator for the diluted calculation if including them in the
calculation resulted in an increase to earnings per share. 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 2007, 2008, and 2009, potentially dilutive securities representing approximately 128 million, 140 million,
and 122 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,
2007 2008 2009
Basic:
Numerator:
Net income attributable to Yahoo! ........................... $ 639,155 $ 418,921 $ 597,992
Less: Net income allocated to participating securities ........ (1,797) (435) (552)
Net income attributable to Yahoo! common stockholders—basic . . . $ 637,358 $ 418,486 $ 597,440
Denominator:
Weighted average common shares ........................... 1,338,987 1,369,476 1,397,652
Net income attributable to Yahoo! common stockholders per
share—basic ........................................... $ 0.48 $ 0.31 $ 0.43
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