Dollar Rent A Car 2011 Annual Report Download - page 64

ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The
Company plans to adopt ASU 2011-11 on January 1, 2013, as required, but does not believe this guidance will have a significant impact on the
Company’s consolidated financial statements.
2. EARNINGS PER SHARE
The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted EPS is shown in the
following table:
Year Ended December 31,
2011 2010 2009
(In Thousands, Except Share and Per Share Data)
Net income $ 159,550 $ 131,216 $ 45,022
Basic EPS:
Weighted average common shares 28,965,187 28,623,108 22,687,077
Basic EPS $ 5.51 $ 4.58 $ 1.98
Diluted EPS:
Weighted average common shares 28,965,187 28,623,108 22,687,077
Shares contingently issuable:
Stock options 1,913,783 1,226,089 762,673
Performance awards and non-vested shares 94,261 125,225 255,775
Employee compensation shares deferred 47,232 49,374 105,402
Director compensation shares deferred 220,778 221,485 155,611
Shares applicable to diluted 31,241,241 30,245,281 23,966,538
Diluted EPS $ 5.11 $ 4.34 $ 1.88
At December 31, 2011 and 2010, all options to purchase shares of common stock were included in the computation of diluted EPS because no exercise
price was greater than the average market price of the common shares. At December 31, 2009, 356,970 outstanding common stock equivalents that
were anti-dilutive were excluded from the computation of diluted EPS.
Although there have been no significant equity grants since 2010, shares included in the diluted EPS calculation increased on a year-over-year basis
from December 31, 2010 to December 31, 2011. The Company uses the treasury stock method to determine the denominator used in the diluted EPS
calculation. To derive the denominator, the number of outstanding options is reduced by the number of shares that would be repurchased from
assumed proceeds of certain defined items including the exercise price of the option and the excess tax benefit that would result from the assumed
exercise of the option. However, the excess tax benefit component is included only if the assumed tax benefit would decrease the Company’s current
taxes payable. Since the Company is not a taxpayer for federal income tax purposes in 2011, it does not benefit from the tax deduction related to the
assumed option exercises for purposes of the diluted share calculation as it did in 2010, thus resulting in an increase in the dilutive EPS denominator of
approximately 700,000 shares. When the Company becomes a taxpayer in the future, the tax benefit will be incorporated into the diluted share
calculation and the shares included in the diluted EPS calculation will be reduced by the shares repurchased from the assumed proceeds; however,
other factors, such as the Company’s stock price, could impact the diluted EPS calculation. See Note 13 for further discussion of share repurchase
program.
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