XPO Logistics Announces Fourth Quarter and Full Year 2012 Results

  • Provides Full Year 2013 Outlook
  • Acquires Covered Logistics

XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the fourth quarter and full year 2012.

For the fourth quarter of 2012, total revenue was $108.5 million, a 146.1% increase from the same period the prior year. Gross margin dollars increased 118.4% year-over-year to $15.7 million, and gross margin percentage was 14.4%.

Consistent with the company's previously announced strategy, investments in long-term growth impacted fourth quarter results. The company reported a net loss of $9.3 million for the quarter, compared with a net loss of $1.5 million for the same period in 2011. The fourth quarter net loss available to common shareholders was $10.1 million, or a loss of $0.57 per diluted share, compared with a net loss available to common shareholders of $2.2 million, or a loss of $0.27 per diluted share, for the same period in 2011.  

Earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP financial measure, was a loss of $9.9 million for the fourth quarter of 2012, compared with a loss of $2.1 million for the same period in 2011. EBITDA includes $913,000 and $882,000 of non-cash share-based compensation for the fourth quarters of 2012 and 2011, respectively. A reconciliation of EBITDA to net income is provided in the attached financial tables.

The company had $252.3 million of cash as of December 31, 2012.

2013 Outlook

The company provided the following outlook for full year 2013:

  • An annual revenue run rate of more than $1 billion as of December 31;
  • At least $300 million of acquired historical annual revenue;
  • Positive EBITDA for the fourth quarter; and
  • At least three new freight brokerage cold-starts. 

Acquires Covered Logistics & Transportation LLC

On February 22, 2013, the company acquired substantially all of the operating assets of Covered Logistics & Transportation LLC, a non-asset, third party freight brokerage business with 2012 revenues of approximately $27 million. The purchase price was $8 million in cash and $3 million in XPO common stock, excluding any working capital adjustments, with no assumption of debt. The acquisition is expected to be immediately accretive to earnings.

Founded in 2005, Covered Logistics has over 4,000 carrier relationships and a strong track record of serving the manufacturing, postal, consumer, and oil and gas sectors. Its offices are located in Lake Forest, Ill., and Dallas, Texas. Co-founders Tuck Jasper, Paul Jasper and Patrick Gillihan will continue to lead the operations, which are being rebranded as XPO Logistics.

CEO Comments

Brad Jacobs, chairman and chief executive officer, said, "The actions we're taking to scale up the business are continuing to drive results. Our fourth quarter revenue was up 146% year-over-year, and gross margin dollars increased by 118%. Our freight brokerage business generated 760% more revenue in the quarter, as compared to the prior year period. Our expedite business achieved top line growth of 8.7% for the quarter, and we have new initiatives in place to gain margin. Freight forwarding had a 62% increase in gross margin dollars versus fourth quarter 2011. While our investments in people and technology resulted in a loss, as expected, they are fundamentally important to value creation. We're currently on an annual revenue run rate of over $500 million, and we expect that rate to be more than a billion dollars by year-end."

Jacobs continued, "Our most recent acquisition, Covered Logistics, is a well-run freight brokerage operation that we plan to integrate and scale up quickly. The Covered team has deep roots in the industry and they share our passion for growth. This is our second acquisition of 2013 from a pipeline of solid prospects. We expect to add at least $300 million of acquired historical annual revenue in 2013.

"We remain focused on executing the three parts of our strategy: acquisitions, cold-starts and the optimization of our operations. In 14 months, we've acquired six companies and opened 17 cold-starts, eight in freight brokerage. Our footprint now stands at 60 locations. We've grown our headcount from 208 to more than 900 employees. We're steadily enhancing our proprietary technology, and implementing leading edge recruitment and training programs. Most importantly, we've created a driven culture that keeps us on track to grow XPO into a multi-billion dollar company."

Fourth Quarter 2012 Results by Business Unit

  • Freight brokerage: The company's freight brokerage business generated total revenue of $71.1 million for the quarter, a 760.3% increase from the same period the prior year. Year-over-year revenue growth was primarily due to the acquisitions of Turbo Logistics, Kelron Logistics, Continental Freight Services and BirdDog Logistics, as well as revenue growth from the company's eight brokerage cold-start locations. The acquisition of Turbo Logistics on October 24, 2012, had a positive revenue impact of $27.2 million for the quarter. Gross margin percentage for the freight brokerage business was 13.4% for the quarter, compared with 16.8% for the same period in 2011. The decline in gross margin percentage was primarily due to the addition of seven new cold-starts in 2012, which are still in the start-up phase. The fourth quarter operating loss was $2.5 million, compared with operating income of $496,000 the prior year. The decline in 2012 operating income primarily reflects a planned increase in SG&A expense associated with significant growth initiatives, including sales force recruitment.
  • Expedited transportation: The company's expedited services business generated total revenue of $22.1 million for the quarter, an 8.7% increase from the same period the prior year. Revenue growth was primarily driven by an increase in average revenue-per-load and growth in the company's domestic, international and temperature-controlled services. Gross margin percentage was 16.5% for the quarter, compared with 20.9% for the same period in 2011. The decrease in gross margin percentage primarily reflects higher rates paid to independent fleet owners and owner-operators, effective March 1, 2012, and an increase in the volume of cross-border loads, which typically generate a lower margin. Fourth quarter operating income was $1.0 million, compared with $1.8 million the prior year, primarily reflecting the year-over-year decrease in gross margin.
  • Freight forwarding: The company's freight forwarding business generated total revenue of $18.5 million for the quarter, a 10.1% increase from the same period the prior year. Gross margin percentage was 13.5% for the quarter, compared with 9.2% for the same period in 2011. The improvements in revenue and gross margin percentage reflect a revenue increase from company-owned branches. Fourth quarter operating income was $454,000, compared with $35,000 for the same period the prior year. The increase in operating income reflects a higher gross margin, partially offset by higher SG&A costs associated with new company-owned locations in Chicago, Houston, Los Angeles, Minneapolis, Charlotte and Atlanta.
  • Corporate: Corporate SG&A expense for the fourth quarter of 2012 increased by $5.3 million, compared with the same period the prior year. The increase was driven by a higher headcount in corporate shared services and higher purchased services. Corporate SG&A expense for the fourth quarter of 2012 included approximately $1.4 million of litigation-related legal costs; $1.0 million of acquisition-related transaction costs; and $913,000 of non-cash share based compensation.  

Full Year 2012 Financial Results

For the full year 2012, total revenue was $278.6 million, a 57.3% increase from 2011. Gross margin dollars increased 37.1% year-over-year to $40.8 million, and gross margin percentage was 14.7%.

Consistent with the company's previously announced strategy, investments in long-term growth impacted full year results. The company reported a net loss of $20.3 million for the full year 2012, compared with net income of $759,000 for 2011. The net loss available to common shareholders was $23.3 million, or a loss of $1.49 per diluted share, compared with a net loss available to common shareholders of $44.6 million, or a loss of $5.41 per diluted share, for 2011. The full year 2012 loss includes a charge of $0.19 per diluted share related to $3.0 million in cumulative preferred dividends. The full year 2011 loss includes a non-cash charge of $44.2 million, or $5.36 per diluted share, related to the September 2011 equity investment in the company.

EBITDA was a loss of $25.8 million for the full year 2012, compared with $2.7 million of EBITDA generated in 2011. Full year 2012 EBITDA was impacted by a $2.9 million expense ($1.9 million after tax) for acquisition-related transaction costs; a $2.5 million expense ($1.6 million after tax) for litigation-related legal costs; a $540,000 expense ($344,000 after tax) for compensation, severance and professional fees related to the composition of the company's executive team; a $480,000 expense ($306,000 after tax) for consulting fees in connection with securing an agreement with the state of North Carolina for up to $3.2 million in future tax incentives; and $4.4 million of non-cash share-based compensation. A reconciliation of EBITDA to net income is provided in the attached financial tables.

Conference Call

The company will hold a conference call on Thursday, February 28, 2013, at 8:30 a.m. Eastern Time. Participants can call toll-free (from U.S./Canada) 1-800-446-1671; international callers dial +1-847-413-3362. A live webcast of the conference will be available on the Investor Relations area of the company's website, www.xpologistics.com. The conference will be archived until March 30, 2013. To access the replay by phone, call toll-free (from U.S./Canada) 1-888-843-7419; international callers dial +1-630-652-3042. Use participant passcode 34113016.

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules, such as earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA") for the quarters and years ended December 31, 2012 and December 31, 2011. As required by SEC rules, we provide reconciliations of these measures to the most directly comparable measure under United States generally accepted accounting principles ("GAAP"), which are set forth in the attachments to this release. We believe that EBITDA improves comparability from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization) and tax consequences. In addition to its use by management, we believe that EBITDA is a measure widely used by securities analysts, investors and others to evaluate the financial performance of companies in our industry. Other companies may calculate EBITDA differently, and therefore our EBITDA may not be comparable to similarly titled measures of other companies. EBITDA is not a measure of financial performance or liquidity under GAAP and should not be considered in isolation or as an alternative to net income, cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from EBITDA are significant and necessary components of the operations of our business, and, therefore, EBITDA should only be used as a supplemental measure of our operating performance.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, our 2013 outlook with respect to annual revenue, acquisitions, fourth quarter 2013 EBITDA and freight brokerage cold-starts. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "potential," "predict," "should," "will," "expect," "objective," "projection," "forecast," "goal," "guidance," "outlook," "effort," "target" or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include, but are not limited to, those discussed in our filings with the SEC and the following: economic conditions generally; competition; our ability to find suitable acquisition candidates and execute our acquisition strategy; our ability to raise capital; our ability to attract and retain key employees to execute our growth strategy; our ability to develop and implement a suitable information technology system; our ability to maintain positive relationships with our network of third-party transportation providers; litigation; and governmental regulation. All forward-looking statements set forth in this press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this press release speak only as of the date hereof and we do not undertake any obligation to update forward-looking statements, including our 2013 outlook, to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events.


XPO Logistics, Inc.
Consolidated Balance Sheets
(in thousands except share data)
           
  December 31, 2012   December 31, 2011
ASSETS (Unaudited)      
Current assets:          
  Cash and cash equivalents $ 252,293   $ 74,007
           
  Accounts receivable, net of allowances of $603 and $356, respectively   61,245     22,425
  Prepaid expenses   1,555     426
  Deferred tax asset, current   1,406     955
  Income tax receivable   2,569     1,109
  Other current assets   1,866     219
    Total current assets   320,934     99,141
           
  Property and equipment, net of $5,323 and $3,937          
  in accumulated depreciation, respectively   13,090     2,979
  Goodwill   55,947     16,959
  Identifiable intangible assets, net of  $4,592 and $3,320          
  in accumulated amortization, respectively   22,473     8,053
  Other long-term assets   764     509
   Total long-term assets   92,274     28,500
    Total assets $ 413,208   $ 127,641
           
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
  Accounts payable $ 22,108   $ 8,565
  Accrued salaries and wages   3,516     2,234
  Accrued expenses, other   21,123     2,789
  Current maturities of notes payable and capital leases   491     1,675
  Other current liabilities   1,789     808
    Total current liabilities   49,027     16,071
           
  Convertible senior notes   108,280     0
  Notes payable and capital leases, net of current maturities   676     454
  Deferred tax liability, long term   6,781     2,346
  Other long-term liabilities   3,385     410
    Total long-term liabilities   119,122     3,210
           
Stockholders' equity:          
 Preferred stock, $.001 par value; 10,000,000 shares;          
   74,275 shares issued and outstanding   42,794     42,794
  Common stock, $.001 par value; 150,000,000 shares authorized;          
  18,002,985 and 8,410,353          
  shares issued, respectively; and17,957,985 and 8,365,353 shares          
  outstanding, respectively   18     8
  Additional paid-in capital   262,641     102,613
  Treasury stock, at cost, 45,000 shares held   (107)     (107)
  Accumulated deficit   (60,287)     (36,948)
    Total stockholders' equity   245,059     108,360
      Total liabilities and stockholders' equity $ 413,208   $ 127,641

 

XPO Logistics, Inc.
Consolidated Statement of Cash Flows
(in thousands, except per share amounts)
                   
    Year Ended December 31,
      2012       2011     2010
Operating activities                
 Net income $ (20,339)   $ 759   $ 4,888
Adjustments to reconcile net income to net cash from operating activities                
  Provisions for allowance for doubtful accounts   916     219     (84)
  Depreciation & amortization expense   2,713     1,240     1,290
  Accretion of debt   1,475     0     0
  Stock compensation expense   4,398     1,180     157
  Other   2     12     4
  Non-cash impairment of incentive payments   0     0     75
Changes in assets and liabilities, net of effects of acquisitions:                
  Accounts receivable   (13,755)     1,627     (6,618)
  Deferred tax expense   (8,260)     (327)     900
  Income tax receivable   (1,556)     239     (1,348)
  Other current assets   1,593     595     (355)
  Prepaid expenses   (769)     (170)     (99)
  Other long-term assets and advances   (276)     97     338
  Accounts payable   (2,585)     (191)     1,987
  Accrued expenses   12,661     1,097     1,780
  Other liabilities   (518)     234     (658)
Cash provided (used) by operating activities   (24,300)     6,611     2,257
Investing activities                
  Acquisition of businesses, net of cash acquired   (57,236)     0     0
  Payment of acquisition earn-out   (450)     (450)     (500)
  Payment for purchases of property and equipment   (6,981)     (754)     (811)
  Proceeds from sale of assets   0     13     2
Cash Flows used by investing activities   (64,667)     (1,191)     (1,309)
Financing Activities                
  Credit line, net activity   (2,068)     (2,749)     (3,781)
  Proceeds from issuance of preferred stock, net of issuance costs   0     71,628     0
  Proceeds from issuance of convertible senior notes, net   138,504     0     0
  Proceeds from issuance of long-term debt   0     0     5,000
  Payments of notes payable and capital leases   (2,190)     (1,633)     (2,665)
  Excess tax benefit from stock options   0     451     0
  Proceeds from stock offering   136,961     0     0
  Proceeds from exercise of options, net   248     704     564
  Payments of tax withholdings for restricted shares   (1,226)     0     0
  Dividends paid to preferred stockholders   (3,000)     (375)     0
Cash flows provided  by Financing Activities   267,229     68,026     (882)
Effect of exchange rate changes on cash   24     0     0
Net increase  in cash   178,286     73,446     66
Cash, beginning of period   74,007     561     495
Cash, end of period of period $ 252,293   $ 74,007   $ 561
                   
Supplemental disclosure of noncash activities:                
                   
  Cash paid during the period for interest   22     110     124
  Cash paid during the period for income taxes   247     233     3,521

 

Freight Brokerage
Summary Financial Table
(in thousands)
                     
  Three Months Ended December 31,
  2012     2011     $ Variance       Change %
Revenue                      
  Operating revenue $ 71,146   $ 8,270   $ 62,876   760.3%
Direct expense                    
  Transportation services   61,379     6,872     54,507   793.2%
  Other direct expense   245     9     236   2622.2%
Total direct expense   61,624     6,881     54,743   795.6%
    Gross margin   9,522     1,389     8,133   585.5%
SG&A expense                    
  Salaries & benefits   8,778     705     8,073   1145.1%
  Purchased services   672     35     637   1820.0%
  Other SG&A expense   1,734     141     1,593   1129.8%
  Depreciation & amortization   810     12     798   6650.0%
Total SG&A expense   11,994     893     11,101   1243.1%
Operating (loss) income $ (2,472)   $ 496   $ (2,968)   -598.4%
                     
                       
  Year Ended December 31,
  2012   2011     $ Variance       Change %
Revenue                    
  Operating revenue $ 125,121   $ 29,186   $ 95,935   328.7%
Direct expense                    
  Transportation services   108,507     24,434     84,073   344.1%
  Other direct expense   489     55     434   789.1%
Total direct expense   108,996     24,489     84,507   345.1%
    Gross margin   16,125     4,697     11,428   243.3%
SG&A expense                    
  Salaries & benefits   15,170     2,484     12,686   510.7%
  Purchased services   1,694     148     1,546   1044.6%
  Other SG&A expense   3,590     716     2,874   401.4%
  Depreciation & amortization   1,223     44     1,179   2679.5%
Total SG&A expense   21,677     3,392     18,285   539.1%
Operating (loss) income $ (5,552)   $ 1,305   $ (6,857)   -525.4%

 

Freight Brokerage
Key Employee Data
 
  Three Months Ended
  March 30, 2012     June 30, 2012     Sept 30, 2012     Dec 31, 2012
Number of sales and procurement personnel   40     92       290     594

Note: Totals are as of period end, and include the positions of shipper sales, carrier procurement and logistics coordinators, and reflect the impact of recruitment and acquisitions.

Expedited Transportation
Summary Financial Table
(in thousands)
                     
  Three Months Ended December 31,
  2012     2011     $ Variance       Change %
Revenue                    
 Operating revenue $ 22,102     $ 20,337   $ 1,765   8.7%
Direct expense                    
 Transportation services   17,381     15,379     2,002   13.0%
 Other direct expense   1,065     713     352   49.4%
Total direct expense   18,446     16,092     2,354   14.6%
    Gross margin   3,656     4,245     (589)   -13.9%
SG&A expense                    
 Salaries & benefits   1,673     1,645     28   1.7%
 Purchased services   308     360     (52)   -14.4%
 Other SG&A expense   608     323     285   88.2%
 Depreciation & amortization   79     86     (7)   -8.1%
Total SG&A expense   2,668     2,414     254   10.5%
Operating income $ 988   $ 1,831   $ (843)   -46.0%
                     
                     
  Year Ended December 31,
  2012     2011     $ Variance       Change %
Revenue                    
 Operating revenue $ 94,008   $ 87,558   $ 6,450   7.4%
Direct expense                    
 Transportation services   73,376     66,267     7,109   10.7%
 Other direct expense   3,738     2,998     740   24.7%
Total direct expense   77,114     69,265     7,849   11.3%
    Gross margin   16,894     18,293     (1,399)   -7.6%
SG&A expense                    
 Salaries & benefits   6,613     6,854     (241)   -3.5%
 Purchased services   1,015     1,426     (411)   -28.8%
 Other SG&A expense   2,121     1,411     710   50.3%
 Depreciation & amortization   320     403     (83)   -20.6%
Total SG&A expense   10,069     10,094     (25)   -0.2%
Operating income $ 6,825   $ 8,199   $ (1,374)   -16.8%

Note: Total depreciation and amortization for the Expedited Transportation operating segment included in both direct expense and SG&A, was $130,000 and $131,000 for the three-months ended December 31, 2012 and 2011, respectively, and $524,000 and $596,000 for the years ended December 31, 2012 and 2011, respectively, ended December 31, 2012 and 2011.

Freight Forwarding
Summary Financial Table
(in thousands)
                     
  Three Months Ended December 31,
  2012     2011     $ Variance       Change %
Revenue                    
 Operating revenue $ 18,463   $ 16,769   $ 1,694   10.1%
Direct expense                    
 Transportation services   13,804     12,479     1,325   10.6%
 Station commissions   2,120     2,711     (591)   -21.8%
 Other direct expense   54     42     12   28.6%
Total direct expense   15,978     15,232     746   4.9%
   Gross margin   2,485     1,537     948   61.7%
SG&A expense                    
 Salaries & benefits   1,280     774     506   65.4%
 Purchased services   203     122     81   66.4%
 Other SG&A expense   407     461     (54)   -11.7%
 Depreciation & amortization   141     145     (4)   -2.8%
Total SG&A expense   2,031     1,502     529   35.2%
Operating income $ 454   $ 35   $ 419   1197.1%
                     
                     
  Year Ended December 31,
  2012   2011   $ Variance       Change %
Revenue                    
 Operating revenue $ 67,692   $ 65,148   $ 2,544   3.9%
Direct expense                    
 Transportation services   50,381     47,122     3,259   6.9%
 Station commissions   9,321     11,098     (1,777)   -16.0%
 Other direct expense   182     140     42   30.0%
Total direct expense   59,884     58,360     1,524   2.6%
   Gross margin   7,808     6,788     1,020   15.0%
SG&A expense                    
 Salaries & benefits   4,050     2,897     1,153   39.8%
 Purchased services   597     432     165   38.2%
 Other SG&A expense   1,479     1,339     140   10.5%
 Depreciation & amortization   574     575     (1)   -0.2%
Total SG&A expense   6,700     5,243     1,457   27.8%
Operating income $ 1,108   $ 1,545   $ (437)   -28.3%

 

XPO Corporate
Summary of Selling, General & Administrative Expense
(in thousands)
                     
  Three Months Ended December 31,
  2012   2011   $ Variance       Change %
SG&A expense                              
 Salaries & benefits $ 3,780   $ 3,207   $ 573   17.9%
 Purchased services   4,422     1,304     3,118   239.1%
 Other SG&A expense   1,691     232     1,459   628.9%
 Depreciation &
amortization
  168     8     160   2000.0%
Total SG&A expense $ 10,061   $ 4,751   $ 5,310   111.8%
                     
                     
  Year Ended December 31,
                   
  2012   2011   $ Variance       Change %
SG&A expense                    
 Salaries & benefits $ 13,445   $ 4,103   $ 9,342   227.7%
 Purchased services   12,082     4,727     7,355   155.6%
 Other SG&A expense   4,425     471     3,954   839.5%
 Depreciation &
amortization
  391     24     367   1529.2%
Total SG&A expense $ 30,343   $ 9,325   $ 21,018   225.4%

Note: Intercompany eliminations included revenue of $3.2 million and $1.3 million for the three-months ended December 31, 2012 and 2011, respectively, as well as revenue of $8.2 million and $4.8 million for the years ended December 31, 2012 and 2011, respectively.

Reconciliation of Non-GAAP Measures
XPO Logistics, Inc.
Consolidated Reconciliation of EBITDA to Net Income
(in thousands)
                               
  Three Months Ended       Year Ended    
  December 31,       December 31,    
  2012   2011      Change %   2012   2011      Change %
                               
Net (loss) income available to common shareholders $ (10,062)     $ (2,212)     354.9%     $ (23,332)     $ (44,577)     -47.7%
Dividends and preferred shares conversion charge   (743)     (750)   -0.9%     (2,993)     (45,336)   -93.4%
Net (loss) income   (9,319)     (1,462)   537.41%     (20,339)     759   -2779.7%
Interest expense   3,177     46   6806.5%     3,207     191   1579.1%
Income tax provision   (4,994)     (967)   416.4%     (11,195)     718   -1659.2%
Depreciation and amortization   1,198     251   377.3%     2,508     1,046   139.8%
EBITDA $ (9,938)   $ (2,132)   366.1%   $ (25,819)   $ 2,714   -1051.3%

Note: Please refer to the "Non-GAAP Financial Measures" section of the press release.

XPO Logistics, Inc.
Consolidated Calculation of Diluted Weighted Shares Outstanding
               
  Three Months Ended   Year Ended Ended
  December 31,   December 31,   December 31,   December 31,
  2012   2011   2012   2011
Basic common stock outstanding 17,701,679   8,252,891   15,694,430   8,246,577
               
Potentially Dilutive Securities:              
Shares underlying the conversion 10,522,399   10,714,286   10,695,326   3,522,505
 of preferred stock to common stock              
Shares underlying the conversion 8,575,577   0   2,238,758   0
 of the convertible senior notes              
Shares underlying  warrants to 5,548,022   3,568,707   5,717,284   3,618,061
 purchase common stock              
Shares underlying  stock options 447,545   402,819   473,421   298,017
 to purchase common stock              
Shares underlying  restricted stock units 237,453   682   249,139   6,456
  25,330,996   14,686,492   19,373,928   7,445,039
               
Diluted weighted shares outstanding 43,032,674   22,939,383   35,068,358   15,691,616

 

Note: For dilution purposes, GAAP requires diluted shares to be reflected on a weighted average basis, which takes into account the portion of the period in which the diluted shares were outstanding. The table above reflects the weighted average diluted shares for the periods presented. The impact of this dilution was not reflected in the earnings per share calculations on the Consolidated Statements of Operations because the impact was anti-dilutive. The treasury method was used to determine the shares underlying the warrants to purchase common stock with an average closing market price of common stock of $14.52 per share and $10.50 per share for the three months ended December 31, 2012 and 2011, respectively, and $15.01 per share and $10.57 per share for the years ended December 31, 2012 and 2011, respectively.