Graco 2012 Annual Report Download - page 90

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84
FOOTNOTE 14
Earnings per Share
The calculation of basic and diluted earnings per share is shown below for the years ended December 31, (in millions, except per
share data):
2012 2011 2010
Numerator for basic and diluted earnings per share:
Income from continuing operations $ 399.6 $ 134.6 $ 288.2
Income (loss) from discontinued operations 1.7 (9.4) 4.6
Net income $ 401.3 $ 125.2 $ 292.8
Dividends and equivalents for share-based awards expected to be
forfeited 0.1 0.1 0.1
Net income for basic earnings per share $ 401.4 $ 125.3 $ 292.9
Effect of Preferred Securities (1) ———
Net income for diluted earnings per share $ 401.4 $ 125.3 $ 292.9
Denominator for basic and diluted earnings per share:
Weighted-average shares outstanding 288.5 290.5 279.3
Share-based payment awards classified as participating securities 2.7 3.1 3.1
Denominator for basic earnings per share 291.2 293.6 282.4
Dilutive securities (2) 2.4 2.4 2.5
Convertible Notes (3) — 0.2 13.1
Warrants (4) — — 7.4
Preferred Securities (1) ———
Denominator for diluted earnings per share 293.6 296.2 305.4
Basic earnings per share:
Income from continuing operations $ 1.37 $ 0.46 $ 1.02
Income (loss) from discontinued operations 0.01 (0.03) 0.02
Net income $ 1.38 $ 0.43 $ 1.04
Diluted earnings per share:
Income from continuing operations $ 1.36 $ 0.45 $ 0.94
Income (loss) from discontinued operations 0.01 (0.03) 0.02
Net income $ 1.37 $ 0.42 $ 0.96
(1) The Preferred Securities are anti-dilutive for all years presented, and therefore have been excluded from diluted earnings per share. Had the Preferred
Securities been included in the diluted earnings per share calculation, net income for 2012 would be increased by $7.7 million and by $14.0 million
for each of 2011 and 2010. Weighted-average shares outstanding would be increased by 4.5 million shares for 2012 and by 8.3 million shares for each
of 2011 and 2010. The Preferred Securities were redeemed during 2012. See Footnote 9 for further information.
(2) Dilutive securities include “in the money” options, non-participating restricted stock units and performance stock units. The weighted-average shares
outstanding for 2012, 2011 and 2010 exclude the effect of approximately 9.4 million, 12.4 million and 13.2 million stock options and other securities,
respectively, because such securities were anti-dilutive.
(3) The Convertible Notes issued in March 2009 were dilutive to the extent the average price during the period was greater than $8.61, the conversion
price of the Convertible Notes, and the Convertible Notes were only dilutive for the “in the money” portion of the Convertible Notes that could be
settled with the Company’s stock. The Convertible Notes were dilutive for all years presented, as the average price of the Company’s common stock
during these periods was greater than $8.61. As disclosed in Footnote 9, substantially all of the remaining outstanding principal amount of the Convertible
Notes was extinguished in March 2011, and as such, dilution for 2011 takes into consideration the period of time the Convertible Notes were outstanding.
The Convertible Notes will not meaningfully impact diluted average shares outstanding in subsequent periods because the maximum amount of shares
required to settle the “in the money” portion of the $0.1 million principal amount of the Convertible Notes outstanding as of December 31, 2012 and
2011 is not material. As disclosed in Footnote 9, $324.7 million of the $345.0 million principal amount of the Convertible Notes was extinguished in
September 2010, and as such, dilution for 2010 takes into consideration the period of time the Convertible Notes were outstanding.
The call options purchased in connection with the convertible note hedge transactions, which were settled in September 2010, had an equal and offsetting
impact to the dilution associated with the Convertible Notes in 2010. However, because the impact of the purchased call options would reduce weighted-
average shares outstanding by 13.1 million shares for 2010, the purchased call options are considered anti-dilutive securities. The authoritative accounting
guidance does not permit anti-dilutive securities to be included in weighted-average shares outstanding despite their characteristics and economic
impacts.