If the Company had recorded stock-based compensation to employees using the fair value method
as prescribed by SFAS No. 123, the Company’s net income (loss) would have been adjusted to the pro
forma amounts below:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Twelve Months Ended |
|
| |
|
December 31, |
|
| |
|
2002 |
|
|
2003 |
|
|
2004 |
|
Net income (loss) — as reported |
|
$ |
147 |
|
|
$ |
6,211 |
|
|
$ |
(1,208 |
) |
Add: Non-cash stock-based compensation expense included in
reported income, net of related taxes |
|
|
— |
|
|
|
— |
|
|
|
913 |
|
Less: Stock-based compensation expense under SFAS 123, net
of related taxes |
|
|
(162 |
) |
|
|
(90 |
) |
|
|
(1,101 |
) |
|
|
|
|
|
|
|
|
|
|
Net income (loss) — pro forma |
|
$ |
(15 |
) |
|
$ |
6,121 |
|
|
$ |
(1,396 |
) |
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share — as reported |
|
$ |
0.01 |
|
|
$ |
0.44 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share — pro forma |
|
$ |
(0.00 |
) |
|
$ |
0.44 |
|
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share — as reported |
|
$ |
0.01 |
|
|
$ |
0.43 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share — pro forma |
|
$ |
(0.00 |
) |
|
$ |
0.43 |
|
|
$ |
(0.09 |
) |
|
|
|
|
|
|
|
|
|
|
The fair value of each stock option grant has been estimated pursuant to SFAS 123 on the date
of grant using the Black-Scholes option pricing model with the following weighted average
assumptions:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Twelve Months Ended |
| |
|
December 31, |
| |
|
2002 |
|
2003 |
|
2004 |
Risk free interest rates |
|
|
3.90 |
% |
|
|
3.68 |
% |
|
|
3.64 |
% |
Expected dividend yield |
|
None |
|
None |
|
None |
Expected lives |
|
7 yrs. |
|
7 yrs. |
|
6 yrs. |
Expected volatility |
|
|
129 |
% |
|
|
119 |
% |
|
|
100 |
% |
Weighted average grant date fair values in 2002 and 2004 were $3.73 and $7.89. There were no
stock option grants to employees in 2003.
Net Income (Loss) Per Share
Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during the reported periods.
Diluted EPS reflects the potential dilution that could occur if stock options and other commitments
to issue common stock were exercised using the treasury stock method.
The computation of Basic and Diluted EPS is as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Twelve Months Ended December 31, |
|
| |
|
2002 |
|
|
2003 |
|
|
2004 |
|
Net income (loss) |
|
$ |
147 |
|
|
$ |
6,211 |
|
|
$ |
(1,208 |
) |
Weighted average shares — Basic |
|
|
14,000,000 |
|
|
|
14,000,000 |
|
|
|
15,155,000 |
|
Effect of dilutive stock options (a) |
|
|
421,859 |
|
|
|
279,387 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares — Diluted |
|
|
14,421,859 |
|
|
|
14,279,387 |
|
|
|
15,155,000 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
|
$ |
0.01 |
|
|
$ |
0.44 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share |
|
$ |
0.01 |
|
|
$ |
0.43 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (a) |
|
Potential common shares of 1,349,900 for the year ended 2004 have been
excluded from the loss per share computations because the effect of
their inclusion would be anti-dilutive. |
Recent Accounting Pronouncements
Share-Based Payments
In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment (“FAS 123R”), that addresses the accounting for share-based payment
transactions in which an enterprise receives employee services in exchange for either equity
instruments of the enterprise or liabilities that are based on the fair value of the enterprise’s
equity instruments or that may be settled by the issuance of such equity
F-24
|