Papa Johns 2005 Annual Report Download - page 60

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58
2. Significant Accounting Policies (continued)
During the fourth quarter of 2005, we entered into a new interest rate swap agreement that provides for a
fixed rate of 4.98%, as compared to LIBOR, on the following amount of floating rate debt:
March 15, 2006 to January 16, 2007 $50 million
January 16, 2007 to January 15, 2009 $60 million
January 15, 2009 to January 15, 2011 $50 million
The purpose of the Swap is to provide a hedge against the effects of rising interest rates on the forecasted
future borrowings.
We recognized $974,000 ($598,000 after tax) in 2005, $3.6 million ($2.2 million after tax) in 2004 and
$3.0 million ($1.8 million after tax) in 2003 in accumulated other comprehensive income for the net
change in fair value of our derivatives associated with our debt agreements. Fair value is based on quoted
market prices. See Note 9 for additional information on our debt and credit arrangements.
Earnings per Share
The calculations of basic earnings per common share and earnings per common share – assuming
dilution, as adjusted for the two-for-one stock split discusssed in Note 3 and before the cumulative effect
of a change in accounting principle and income from discontinued operations, for the years ended
December 25, 2005, December 26, 2004 and December 28, 2003 are as follows (in thousands, except per
share data):
2005 2004 2003
Basic earnings per common share:
Income from continuing operations before cumulative
effect of a change in accounting principle
44,268
$
20,037
$
30,734
$
Weighted average shares outstanding 33,594 34,414 35,876
Basic earnings per common share 1.32$ 0.58$ 0.86$
Earnings per common share - assuming dilution:
Income from continuing operations before cumulative
effect of a change in accounting principle
44,268
$
20,037
$
30,734
$
Weighted average shares outstanding 33,594 34,414 35,876
Dilutive effect of outstanding common stock options 722 396 198
Diluted weighted average shares outstanding 34,316 34,810 36,074
Earnings per common share - assuming dilution 1.29$ 0.58$ 0.85$
Options to purchase common stock with an exercise price greater than the average market price for the
year were not included in the computation of the dilutive effect of common stock options because the
effect would have been antidilutive. The weighted average number of antidilutive options was 48,000 in
2005, 1.5 million in 2004 and 4.4 million in 2003.