Annual report pursuant to Section 13 and 15(d)

Earnings per Share

v2.4.0.6
Earnings per Share
 12 Months Ended
Dec. 31, 2012
Earnings Per Share [Abstract]  
Earnings per Share
Earnings per Share

We utilize the two-class method of calculating basic net income per common share, as our Series B Preferred Stock are considered participating securities. Basic net income per common share is calculated by dividing income available to common stockholders by the weighted average common shares outstanding during each reporting period. Diluted net income per common share adjusts the weighted average common shares outstanding for the potential dilution that could occur if common stock equivalents (convertible debt and preferred stock, warrants, stock options, restricted stock and restricted stock units) were exercised or converted into common stock, calculated using the treasury stock method. Common stock equivalents of approximately 147,125,000, 419,752,000 and 689,922,000 for the years ended December 31, 2012, 2011 and 2010, respectively, were excluded from the calculation of diluted net income per common share as the effect would have been anti-dilutive.
 
For the Years Ended December 31,
(in thousands, except per share data)
2012
 
2011
 
2010
Numerator:
 
 
 
 
 
Net income
$
3,472,702

  
$
426,961

 
$
43,055

Less:
 
 
 
 
 
Allocation of undistributed income to Series B Preferred Stock
(1,084,895
)
 
(174,449
)
 
(17,735
)
Dividends paid to preferred stockholders
(64,675
)
 
—

 
—

Net income available to common stockholders for basic net income per common share
2,323,132

 
252,512

 
25,320

Add back:


 


 


Allocation of undistributed income to Series B Preferred Stock
1,084,895

 
174,449

 
17,735

Dividends paid to preferred stockholders
64,675

 
—

 
—

Effect of interest on assumed conversions of convertible debt
38,500

 
—

 
—

Net income available to common stockholders for diluted net income per common share
$
3,511,202

 
$
426,961

 
$
43,055

Denominator:
 
 
 
 
 
Weighted average common shares outstanding for basic net income per common share
4,209,073

  
3,744,606

 
3,693,259

Weighted average impact of assumed Series B Preferred Stock conversion
2,215,900

 
2,586,977

 
2,586,977

Weighted average impact of assumed convertible debt
298,725

 
—

 
—

Weighted average impact of other dilutive equity instruments
150,088

  
169,239

 
110,835

Weighted average shares for diluted net income per common share
6,873,786

  
6,500,822

 
6,391,071

Net income per common share:
 
 
 
 
 
Basic
$
0.55

  
$
0.07

 
$
0.01

Diluted
$
0.51

  
$
0.07

 
$
0.01


We identified and corrected an immaterial error affecting the historical presentation of basic earnings per share. The adjustment reflects the Series B Preferred Stock held by an affiliate of Liberty Media as participating securities as the holder of such preferred stock may participate in dividends and distributions ratably with the holders of our common stock on an as-converted basis.  Net income per common share-basic for the year ended December 31, 2011 was previously reported as $0.11 and has been adjusted to be $0.07. There was no impact on the previously reported net income per common share-basic for the year ended December 31, 2010 and there was no impact on the previously reported diluted earnings per share for any period presented. The effects of the error were not material to any previously reported quarterly or annual period. The related corrections are reflected in the applicable prior periods.
In September 2012, Liberty Media converted 6,249,900 shares of the Series B Preferred Stock into 1,293,467,684 shares of common stock. For a discussion of subsequent events refer to Note 18.