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Note 11 — Net Income per Common Share
2007 2006 2005
Income Shares(a) Income Shares(a) Income Shares(a)
Net income $5,658 $5,642 $4,078
Preferred shares:
Dividends (2) (2) (2)
Redemption
premium (10) (9) (16)
Net income available for common shareholders $5,646 1,621 $5,631 1,649 $4,060 1,669
Basic net income per common share $3.48 $3.42 $2.43
Net income available for common shareholders $5,646 1,621 $5,631 1,649 $4,060 1,669
Dilutive securities:
Stock options and RSUs – 35 – 36 – 35
ESOP convertible preferred stock 12 2 11 2 18 2
Diluted $5,658 1,658 $5,642 1,687 $4,078 1,706
Diluted net income per common share $3.41 $3.34 $2.39
(a) Weighted-average common shares outstanding.
Basic net income per common share is net
income available to common sharehold-
ers divided by the weighted average of
common shares outstanding during the
period. Diluted net income per common
share is calculated using the weighted
average of common shares outstand-
ing adjusted to include the effect that
would occur if in-the-money employee
stock options were exercised and RSUs
and preferred shares were converted into
common shares. Options to purchase
2.7 million shares in 2007, 0.1 million
shares in 2006 and 3.0 million shares in
2005 were not included in the calculation
of diluted earnings per common share
because these options were out-of-the-
money. Out-of-the-money options had
average exercise prices of $65.18 in 2007,
$65.24 in 2006 and $53.77 in 2005.
The computations of basic and
diluted net income per common share
are as follows:
Note 12 — Preferred Stock
As of December 29, 2007 and December
30, 2006, there were 3 million shares of
convertible preferred stock authorized.
The preferred stock was issued only for
an ESOP established by Quaker and these
shares are redeemable for common stock
by the ESOP participants. The preferred
stock accrues dividends at an annual rate
of $5.46 per share. At year-end 2007
and 2006, there were 803,953 preferred
shares issued and 287,553 and
320,853 shares outstanding, respec-
tively. The outstanding preferred shares
had a fair value of $108 million as of
December 29, 2007 and $100 million
as of December 30, 2006. Each share is
convertible at the option of the holder
into 4.9625 shares of common stock.
The preferred shares may be called by us
upon written notice at $78 per share plus
accrued and unpaid dividends. Quaker
made the fi nal award to its ESOP plan in
June 2001.
2007 2006 2005
Shares Amount Shares Amount Shares Amount
Preferred stock
0.8 $41 0.8 $41 0.8 $41
Repurchased preferred stock
Balance, beginning of year 0.5 $120 0.5 $110 0.4 $ 90
Redemptions
– 12 – 10 0.1 19
Balance, end of year 0.5 $132 0.5 $120 0.5 $110(a)
(a) Does not sum due to rounding.
80