Kroger 2010 Annual Report Download - page 136

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A-56
NO T E S T O CO N S O L I D A T E D FI N A N C I A L ST A T E M E N T S , CO N T I N U E D
9. EA R N I N G S PE R CO M M O N SH A R E
Net earnings attributable to The Kroger Co. per basic common share equals net earnings attributable
to The Kroger Co. less income allocated to participating securities divided by the weighted average number
of common shares outstanding. Net earnings attributable to The Kroger Co. per diluted common share
equals net earnings attributable to The Kroger Co. less income allocated to participating securities divided
by the weighted average number of common shares outstanding, after giving effect to dilutive stock
options. The following table provides a reconciliation of net earnings attributable to The Kroger Co. and
shares used in calculating net earnings attributable to The Kroger Co. per basic common share to those
used in calculating net earnings attributable to The Kroger Co. per diluted common share:
For the year ended
January 29, 2011
For the year ended
January 30, 2010
For the year ended
January 31, 2009
(in millions, except per share amounts)
Earnings
(Numer-
ator)
Shares
(Denomi-
nator)
Per
Share
Amount
Earnings
(Numer-
ator)
Shares
(Denomi-
nator)
Per
Share
Amount
Earnings
(Numer-
ator)
Shares
(Denomi-
nator)
Per
Share
Amount
Net earnings attributable to
The Kroger Co. per basic
common share . . . . . . . . . . . . . $ 1,109 635 $1.75 $ 69 647 $0.11 $1,242 652 $1.91
Dilutive effect of stock options . . . 33 6
Net earnings attributable to
The Kroger Co. per diluted
common share . . . . . . . . . . . . . $ 1,109 638 $1.74 $ 69 650 $0.11 $1,242 658 $1.89
The Company had undistributed and distributed earnings to participating securities totaling $7, $1
and $7 in 2010, 2009 and 2008, respectively.
For the years ended January 29, 2011, January 30, 2010 and January 31, 2009, there were options
outstanding for approximately 21.2 million, 20.2 million and 11.8 million shares of common stock,
respectively, that were excluded from the computation of net earnings attributable to The Kroger Co. per
diluted common share. These shares were excluded because their inclusion would have had an anti-dilutive
effect on EPS.
The share amounts above for 2008 differ from those previously reported due to adopting the new
standards that clarify that share-based payment awards that entitle their holders to receive nonforfeitable
dividends before vesting should be considered participating securities and included in the calculation of
basic EPS. The Company adopted the new standards effective February 1, 2009.
10. S T O C K OP T I O N PL A N S
The Company grants options for common stock (“stock options”) to employees, as well as to its non-
employee directors, under various plans at an option price equal to the fair market value of the stock at
the date of grant. The Company accounts for stock options under the fair value recognition provisions.
Under this method, the Company recognizes compensation expense for all share-based payments granted.
The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the
requisite service period of the award. Equity awards may be made at one of four meetings of its Board of
Directors occurring shortly after the Company’s release of quarterly earnings. The 2010 primary grant was
made in conjunction with the June meeting of the Company’s Board of Directors.