Papa Johns 2015 Annual Report Download - page 78

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65
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 Accounting Standards Codification (“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 27, 2015, December 28, 2014 and December 29, 2013 are as follows (in thousands,
except per share data):
2015 2014 2013
Basic earnings per common share:
Net income attributable to the Company 75,682$ 73,315$ 69,537$
Decrease (increase) in noncontrolling interest redemption value 65 (44) (510)
Net income attributable to participating securities (325) (402) (530)
Net income attributable to common shareholders 75,422$ 72,869$ 68,497$
Weighted average common shares outstanding 39,458 40,960 43,387
Basic earnings per common share
1.91
$
1.78
$
1.58
$
Diluted earnings per common share:
Net income attributable to common shareholders 75,422$ 72,869$ 68,497$
Weighted average common shares outstanding 39,458 40,960 43,387
Dilutive effect of outstanding equity awards 542 758 856
Diluted weighted average common shares outstanding 40,000 41,718 44,243
Diluted earnings per common share
1.89
$
1.75
$
1.55
$
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 251,000 in 2015, 226,000 in 2014 and 129,000 in 2013.