Papa Johns 2014 Annual Report Download - page 79

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66
4. Earnings per Share
We compute earnings per share using the two-class method. The two-class method requires an earnings
allocation formula that determines earnings per share for common shareholders and participating security
holders according to dividends declared and participating rights in undistributed earnings. We consider
time-based restricted stock awards to be participating securities because holders of such shares have non-
forfeitable dividend rights. Under the two-class method, undistributed earnings allocated to participating
securities are subtracted from net income attributable to the Company in determining net income
attributable to common shareholders.
Additionally, in accordance with ASC 480, Distinguishing Liabilities from Equity, the increase in the
redemption value for the noncontrolling interest of PJ Denver, LLC reduces income attributable to
common shareholders.
Basic earnings per common share are computed by dividing net income attributable to common
shareholders by the weighted-average common shares outstanding. Diluted earnings per common share
are computed by dividing the net income attributable to common shareholders by the diluted weighted
average common shares outstanding. Diluted weighted average common shares outstanding consists of
basic weighted average common shares outstanding plus weighted average awards outstanding under our
equity compensation plans, which are dilutive securities.
The calculations of basic earnings per common share and diluted earnings per common share for the years
ended December 28, 2014, December 29, 2013 and December 30, 2012 are as follows (in thousands,
except per share data):
2014 2013 2012
Basic earnings per common share:
Net income attributable to the Company 73,315$ 69,537$ 61,660$
Increase in noncontrolling interest redemption value (44) (510) -
Net income attributable to participating securities (402) (530) -
Net income attributable to common shareholders 72,869$ 68,497$ 61,660$
Weighted average common shares outstanding 40,960 43,387 46,916
Basic earnings per common share 1.78$ 1.58$ 1.31$
Diluted earnings per common share:
Net income attributable to common shareholders 72,869$ 68,497$ 61,660$
Weighted average common shares outstanding 40,960 43,387 46,916
Dilutive effect of outstanding equity awards 758 856 894
Diluted weighted average common shares outstanding 41,718 44,243 47,810
Diluted earnings per common share 1.75$ 1.55$ 1.29$
Shares subject to 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 diluted earnings per common share
because the effect would have been antidilutive. The weighted average number of shares subject to
antidilutive options was 226,000 in 2014 and 129,000 in 2013 (none in 2012).
See Note 6 for additional information regarding our noncontrolling interests and Note 18 for equity
awards, including restricted stock.