Baskin Robbins 2012 Annual Report Download - page 86

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In April 2012 and August 2012, certain existing stockholders sold 30,360,000 and 21,754,659 shares, respectively, of our
common stock at prices of $29.50 and $30.00 per share, respectively, less underwriting discounts and commissions, in
secondary public offerings. The Company did not receive any proceeds from the sales of shares by the existing stockholders.
The Company incurred approximately $1.7 million of expenses in connection with the offerings.
(b) Common stock
Prior to the initial public offering, our charter authorized the Company to issue two classes of common stock, Class L and
common. The rights of the holders of Class L and common shares were identical, except with respect to priority in the event of
a distribution, as defined. The Class L common stock was entitled to a preference with respect to all distributions by the
Company until the holders of Class L common stock had received an amount equal to the Class L base amount of
approximately $41.75 per share, plus an amount sufficient to generate an internal rate of return of 9% per annum on the Class L
base amount, compounded quarterly. Thereafter, the Class L and common stock shared ratably in all distributions by the
Company. Class L common stock was classified outside of permanent equity in the consolidated balance sheets at its
preferential distribution amount, as the Class L stockholders controlled the timing and amount of distributions. The Class L
preferred return of 9% per annum, compounded quarterly, was added to the Class L preferential distribution amount each
period and recorded as an increase to accumulated deficit. Dividends paid on the Class L common stock reduced the Class L
preferential distribution amount.
Immediately prior to the initial public offering, each outstanding share of Class L common stock converted into approximately
0.2189 of a share of common stock plus 2.2149 shares of common stock, which was determined by dividing the Class L
preference amount, $38.8274, by the initial public offering price net of the estimated underwriting discount and a pro rata
portion, based upon the number of shares sold in the offering, of the estimated offering-related expenses. As such, the
22,866,379 shares of Class L common stock that were outstanding at the time of the offering converted into 55,652,782 shares
of common stock.
The changes in Class L common stock were as follows (in thousands):
Fiscal year ended
December 31, 2011 December 25, 2010
Shares Amount Shares Amount
Common stock, Class L, beginning of year 22,995 $ 840,582 22,981 $ 1,232,001
Issuance of Class L common stock 65 2,270 14 754
Repurchases of Class L common stock —(113)—
(3,197)
Retirement of treasury stock (194)———
Cash dividends paid ———
(500,002)
Accretion of Class L preferred return — 45,102 — 111,026
Conversion of Class L shares to common shares (22,866)(887,841)— —
Common stock, Class L, end of year — $ — 22,995 $ 840,582
Common shares issued and outstanding included in the consolidated balance sheets include vested and unvested restricted
shares. Common stock in the consolidated statement of stockholders’ equity (deficit) excludes unvested restricted shares.
(c) Treasury stock
During fiscal years 2011 and 2010, the Company repurchased a total of 23,624 shares and 193,800 shares, respectively, of
common stock and 3,266 shares and 65,414 shares, respectively, of Class L shares that were originally sold and granted to
former employees of the Company. The Company accounts for treasury stock under the cost method, and as such recorded
increases in common treasury stock of $173 thousand and $693 thousand during fiscal years 2011 and 2010, respectively, based
on the fair market value of the shares on the respective dates of repurchase. On April 26, 2011, the Company retired all of its
treasury stock, resulting in a $2.0 million reduction in common treasury stock and additional paid-in-capital.
In August 2012, the Company repurchased a total of 15,000,000 shares of common stock at a price of $30.00 per share from
certain existing stockholders, and incurred approximately $341 thousand of third-party costs in connection with the repurchase.
The Company accounts for treasury stock under the cost method, and as such recorded an increase in common treasury stock of
$450.4 million during fiscal year 2012, based on the fair market value of the shares on the date of repurchase and the direct
costs incurred. During fiscal year 2012, the Company retired all outstanding treasury stock, resulting in decreases in common
stock and additional paid-in capital of $15 thousand and $180.0 million, respectively, and an increase in accumulated deficit of
$270.3 million.