Chuy's Holdings, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Net Income Per Share

Net Income Per Share

12 Months Ended

Dec. 29, 2013

NET INCOME PER SHARE

The number of shares and earnings per share data (“EPS”) for all periods presented are based on the historical weighted-average shares of common stock outstanding. EPS for the years ended December 30, 2012 and December 25, 2011 is computed using the two-class method. The two-class method determines EPS for common stock and participating securities according to dividends and dividend equivalents and their respective participation rights in undistributed earnings. The Company’s convertible preferred stockholders were entitled to receive dividends in the event dividends on the Company’s common stock were declared. As a result, the shares of the Company’s convertible preferred stock were deemed to be participating securities.

In connection with the IPO, all preferred stock mandatorily converted to common stock on a 1:1 basis.

Basic EPS of common stock was computed by dividing net income, less the undistributed earnings allocated to participating interests, by the weighted-average number of shares of common stock outstanding for the period. Due to the issuance of the series X preferred stock in 2010, the basic EPS was computed by dividing net income, less the original investment of $5.0 million in series X preferred stock and annualized 20.0% preferred return and the undistributed earnings allocated to participating interests, by the weighted-average number of shares of common stock outstanding for the period. The original investment in series X preferred stock and the 20.0% preferred return was required to be paid to series X preferred stockholders prior to any payment of dividends to the common stockholders.

Diluted EPS of common stock is computed on the basis of the weighted-average number of shares of common stock plus the effect of dilutive potential shares of common stock equivalents outstanding during the period using the treasury stock method for dilutive options and the if converted method for dilutive convertible preferred stock. The numerator is net income less the preferred return and undistributed earnings on the series X preferred stock as this series of preferred stock was anti-dilutive using the if converted method. For all periods presented, undistributed earnings allocated to participating interests related to the series A preferred stock and series B preferred stock were not deducted from net income for purposes of calculating diluted earnings per share because the diluted earnings per share gave effect to the conversion of this preferred stock into common stock as of the beginning of the year.

The computation of basic and diluted net income per share is as follows:



	Year Ended
	December 29, 2013		December 30, 2012		December 25, 2011
BASIC
NUMERATOR:
Net income	$	11,069	$	5,457	$	3,464
Less: liquidation preference and preferred return on series X preferred stock	—		577		1,121
Less: undistributed earnings allocated to participating interest	—		1,594		2,302
Net income available to common stockholders	$	11,069	$	3,286	$	41
DENOMINATOR:
Weighted-average common shares outstanding	16,276,999		6,809,576		191,166
Basic net income per common share	$	0.68	$	0.48	$	0.21
DILUTED
NUMERATOR:
Net income	$	11,069	$	5,457	$	3,464
Less: liquidation preference and preferred return on series X preferred stock	—		577		1,121
Less: undistributed earnings allocated to participating interest	—		91		131
Net income available to common and participating stockholders	$	11,069	$	4,789	$	2,212
DENOMINATOR:
Weighted-average common shares outstanding	16,276,999		6,809,576		191,166
Dilutive effect of preferred stock conversion	—		5,356,896		10,049,572
Dilutive effect of stock options	400,388		726,818		611,913
Weighted-average of diluted shares	16,677,387		12,893,290		10,852,651
Diluted net income per common share	$	0.66	$	0.37	$	0.20

- Definition

The entire disclosure for earnings per share.

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