Dunkin' Donuts 2011 Annual Report Download - page 109

(14) Earnings per Share
The computation of basic and diluted earnings per common share is as follows (in thousands, except share and
per share amounts):
Fiscal year ended
December 31,
2011
December 25,
2010
December 26,
2009
Net income—basic and diluted ............................... $ 34,442 26,861 35,008
Allocation of net income (loss) to common stockholders—basic and
diluted:
Class L .............................................. $ 140,212 111,026 104,560
Common ............................................. (105,770) (84,165) (69,552)
Weighted average number of common shares—basic and diluted:
Class L .............................................. 22,845,378 22,806,796 22,859,274
Common ............................................. 74,835,697 41,295,866 41,096,393
Earnings (loss) per common share—basic and diluted:
Class L .............................................. $ 6.14 4.87 4.57
Common ............................................. (1.41) (2.04) (1.69)
As the Company had both Class L and common stock outstanding during each of the periods presented and Class
L has preference with respect to all distributions, earnings per share is calculated using the two-class method,
which requires the allocation of earnings to each class of common stock. The numerator in calculating Class L
basic and diluted earnings per share is the Class L preference amount accrued at 9% per annum during the period
presented plus, if positive, a pro rata share of an amount equal to consolidated net income less the Class L
preference amount. The Class L preferential distribution amounts accrued were $45.1 million, $111.0 million,
and $104.6 million during fiscal years 2011, 2010, and 2009, respectively. The Class L preferential distribution
amounts for fiscal year 2011 declined from the prior years due to the conversion of the Class L shares into
common stock immediately prior to the Company’s initial public offering that was completed on August 1, 2011,
as well as the dividend paid to holders of Class L shares on December 3, 2010, which reduced the Class L
per-share preference amount on which the 9% annual return is calculated. Additionally, the numerator in
calculating the Class L basic and diluted earnings per share for fiscal year 2011 includes an amount representing
the excess of the fair value of the consideration transferred to the Class L shareholders upon conversion to
common stock over the carrying amount of the Class L shares at the date of conversion, which occurred
immediately prior to the Company’s initial public offering. As the carrying amount of the Class L shares was
equal to the Class L preference amount, the excess fair value of the consideration transferred to the Class L
shareholders was equal to the fair value of the additional 0.2189 of a share of common stock into which each
Class L share converted (“Class L base share”), which totaled $95.1 million, calculated as follows:
Class L shares outstanding immediately prior to the initial public offering ........... 22,866,379
Number of common shares received for each Class L share ...................... 0.2189
Common stock received by Class L shareholders, excluding preferential distribution . . 5,005,775
Common stock fair value per share (initial public offering price per share) .......... $ 19.00
Fair value of Class L base shares (in thousands) ............................... $ 95,110
The weighted average number of Class L shares in the Class L earnings per share calculation represents the
weighted average from the beginning of the period up through the date of conversion of the Class L shares into
common shares.
The weighted average number of common shares in the common diluted earnings per share calculation excludes
all restricted stock and stock options outstanding during the respective periods, as they would be antidilutive. As
of December 31, 2011, there were 643,142 unvested common restricted stock awards and 5,486,487 options to
-99-