Share-based compensation - ASC 718-10-10-01 requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the financial statements based on their fair values. Stock-based
compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC 71810-10-01. The Company recognizes compensation cost net of a forfeiture rate and recognizes the compensation cost
for only those awards expected to vest on a straight-line basis over the requisite service period of the award, which is
generally the vesting term. The Company estimated the forfeiture rate based on its historical experience and its
expectations of future forfeitures. The Company records share-based compensation cost as an administrative
expense. The Company applied the alternative transition method in calculating its pool of excess tax benefits
available to absorb future tax deficiencies as provided by ASC 740-20-45-11. See Note 14.
Earnings per share - Basic income per share is computed by dividing income by the weighted average number of
shares outstanding during the year. Diluted income per share is calculated by giving effect to the potential dilution
that could occur if securities or other contracts to issue common shares were exercised and converted into common
shares during the year.
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share
data):
2010
Numerator:
Income from continuing operations for calculating basic
and diluted earnings per share
Income (loss) from discontinued operations
Net income (loss) for calculating basic and diluted
earnings per share
$
Year Ended December 31,
2009
2008
54,255
$
Denominator:
Weighted-average common shares for calculating basic
earnings per share
Effect of dilutive securities:
Stock options, warrants and restricted stock
Weighted-average common shares for calculating diluted
earnings per share
Basic earnings per share:
Income from continuing operations
Income (loss) from discontinued operations
Net income (loss) per basic share
$
$
Diluted earnings per share:
Income from continuing operations
Income (loss) from discontinued operations
Net income (loss) per diluted share
$
$
57,658
$
8,608
3,403
$
41,156
$
49,764
36,460
(57,996)
$
(21,536)
30,266
29,559
29,575
792
632
641
31,058
30,191
30,216
1.79
0.11
1.90
1.75
0.11
1.86
$
$
$
$
1.39
0.29
1.68
$
1.36
0.29
1.65
$
$
$
1.23
(1.96)
(0.73)
1.21
(1.92)
(0.71)
Pervasiveness of estimates - The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and related revenue and expenses, and the disclosure of gain and
loss contingencies at the date of the financial statements. Such estimates and assumptions are subject to a number of
risks and uncertainties, which may cause actual results to differ materially from the Company’s estimates.
Significant estimates include allowances for doubtful accounts receivable and related credit loss provisions, Auto
Master customer receivables and impairment of goodwill.
Reclassification - Certain amounts for the years ended December 31, 2008 and 2009 have been reclassified in order
to conform to the 2010 presentation.
F-10