Einstein Bros 2011 Annual Report Download - page 51

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312512092597/d260635d10k.htm[9/11/2014 10:08:30 AM]
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following table summarizes the weighted-average number of common shares outstanding, as well as sets forth the computation of basic
and diluted net income per common share for the periods:
Fiscal year ended
December 29, December 28, January 3,
2009 2010 2012
(in thousands, except earnings per share and related
share information)
Net income $ 90,363 $ 10,623 $ 13,203
Less: Additional redemption on temporary equity — (387) —
Add: Accretion of premium on Series Z preferred stock — 1,072 —
Net income available to common stockholders (a) $ 90,363 $ 11,308 $ 13,203
Basic weighted average shares outstanding (b) 16,175,391 16,532,420 16,629,098
Dilutive effect of stock options and SARs 351,478 272,306 251,223
Diluted weighted average shares outstanding (c) 16,526,869 16,804,726 16,880,321
Net income available to common stockholders per share-Basic (a)/(b) $ 5.59 $ 0.68 $ 0.79
Net income available to common stockholders per share-Diluted (a)/(c) $ 5.47 $ 0.67 $ 0.78
Anti-dilutive stock options and SARs 407,539 236,275 405,374
Stock-Based Compensation
The Company maintains several equity incentive plans under which it may grant non-qualified stock options, incentive stock options, stock
appreciation rights, restricted stock units or restricted stock to employees, non-employee directors and consultants. Restricted stock and restricted
stock units are valued using the closing stock price on the date of grant. The fair value of an option award is determined using the Black-Scholes
option pricing model, which incorporates ranges of assumptions for inputs. The Company’ s assumptions are as follows:
• Expected Term - The expected term of options is based upon evaluations of historical and expected future exercise behavior.
• Risk Free Interest Rate - The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates
approximately equal to the expected life at the grant date.
• Implied Volatility - Implied volatility is based on the mean reverting average of the Company’ s historical stock volatility and that of an
industry peer group. The Company believes that the use of mean reversion is supported by evidence of a correlation between stock
price volatility and a company’ s leverage, combined with the effects that mandatory principal payments will have on the Company’ s
capital structure, as defined under its debt facility.
• Dividend Yield—The Company declared dividends in fiscal 2010 and fiscal 2011, and anticipates that it will continue to pay dividends
in the future, at the discretion of its Board of Directors (the “Board”). The payment of dividends is dependent on a variety of factors,
including available cash and the overall financial condition of the Company.
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Vesting of awards can either be based on the passage of time or on the achievement of performance goals. For awards that vest on the passage
of time, compensation cost is recognized using a graded vesting attribution method over the vesting period. For performance based awards, the
Company will recognize compensation costs over the requisite service period when conditions for achievement become probable. The Company
also estimates forfeitures at the time of grant and revises those estimates in subsequent periods if actual forfeitures differ or are expected to differ.