Papa Johns 2000 Annual Report Download - page 52

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47
2. Significant Accounting Policies (continued)
Earnings per Share
The calculations of basic earnings per common share and earnings per common share - assuming dilution
before the cumulative effect of a change in accounting principle for the years ended December 31, 2000,
December 26, 1999, and December 27, 1998 are as follows (in thousands, except per share data):
2000 1999 1998
Basic earnings per common share:
Income before cumulative effect of a change in
accounting principle 31,824$ 47,286$ 34,964$
Weighted average shares outstanding 24,703 30,195 29,537
Basic earnings per common share 1.29$ 1.57$ 1.18$
Earnings per common share - assuming dilution:
Income before cumulative effect of a change in
accounting principle 31,824$ 47,286$ 34,964$
Weighted average shares outstanding 24,703 30,195 29,537
Dilutive effect of outstanding common stock options 204 885 918
Diluted weighted average shares outstanding 24,907 31,080 30,455
Earnings per common share - assuming dilution 1.28$ 1.52$ 1.15$
Options to purchase common stock with an exercise price greater than the average market price were not
included in the computation of the dilutive effect of common stock options because the effect would have
been antidilutive. The number of antidilutive options was 3.7 million in 2000, 986,000 in 1999, and 213,000
in 1998.
Accounting Changes
In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5,
“Reporting on the Costs of Start-Up Activities” (the “SOP”), which requires that costs related to start-up
activities be expensed as incurred. Prior to 1998, we capitalized our start-up costs incurred primarily in
connection with opening new restaurant and commissary locations and amortized these costs on a straight-
line basis over a period of one year from the facility’ s opening date. We adopted the provisions of the SOP
in our financial statements for the year ended December 27, 1998. The adoption resulted in a charge in the
first quarter of 1998 for the cumulative effect of an accounting change of $2.6 million, net of taxes of $1.5
million, to expense costs that had been previously capitalized prior to 1998. Excluding the one-time
cumulative effect, the adoption of the new accounting standard did not have a material impact on 1998
operating results.