Baskin Robbins 2011 Annual Report Download - page 56

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Diluted earnings per pro forma common share and diluted adjusted earnings per pro forma common share are not
presentations made in accordance with GAAP, and our use of the terms diluted earnings per pro forma common
share and diluted adjusted earnings per pro forma common share may vary from similar measures reported by
others in our industry due to the potential differences in the method of calculation. Diluted earnings per pro
forma common share and diluted adjusted earnings per pro forma common share should not be considered as
alternatives to earnings (loss) per share derived in accordance with GAAP. Diluted earnings per pro forma
common share and diluted adjusted earnings per pro forma common share have important limitations as an
analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported
under GAAP. Because of these limitations, we rely primarily on our GAAP results. However, we believe that
presenting diluted earnings per pro forma common share and diluted adjusted earnings per pro forma common
share is appropriate to provide additional information to investors to compare our performance prior to and after
the completion of our initial public offering and related conversion of Class L shares into common as well as to
provide investors with useful information regarding our historical operating results. The following table sets forth
the computation of diluted earnings per pro forma common share and diluted adjusted earnings per pro forma
common share:
Fiscal year
2009 2010 2011
Diluted earnings per pro forma common share:
Net income (in thousands) ............................... $ 35,008 26,861 34,442
Pro forma weighted average number of common
shares – diluted:
Weighted average number of Class L shares
over period in which Class L shares were
outstanding(1) .................................. 22,859,274 22,806,796 22,845,378
Adjustment to weight Class L shares over
respective fiscal year(1) .......................... — — (9,790,933)
Weighted average number of Class L shares
over fiscal year ................................. 22,859,274 22,806,796 13,054,445
Class L conversion factor ........................... 2.4338 2.4338 2.4338
Weighted average number of converted Class L shares .... 55,635,490 55,507,768 31,772,244
Weighted average number of common shares ........... 41,096,393 41,295,866 74,835,697
Pro forma weighted average number of common
shares – basic ................................... 96,731,883 96,803,634 106,607,941
Incremental dilutive common shares(2) ................ 656,949 275,844 1,064,587
Pro forma weighted average number of common
shares – diluted ..................................... 97,388,832 97,079,478 107,672,528
Diluted earnings per pro forma common share ............... $ 0.36 0.28 0.32
Diluted adjusted earnings per pro forma common share:
Adjusted net income (in thousands) ....................... $ 59,504 87,759 101,744
Pro forma weighted average number of common
shares – diluted ..................................... 97,388,832 97,079,478 107,672,528
Diluted adjusted earnings per pro forma common share ....... $ 0.61 0.90 0.94
(1) The weighted average number of Class L shares in the actual Class L earnings per share calculation for
fiscal year 2011 represents the weighted average from the beginning of the fiscal year up through the date of
conversion of the Class L shares into common shares. As such, the pro forma weighted average number of
common shares includes an adjustment to the weighted average number of Class L shares outstanding to
reflect the length of time the Class L shares were outstanding prior to conversion relative to the respective
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