EXHIBIT 11.1
HEADLANDS MORTGAGE COMPANY
STATEMENT RE COMPUTATION OF PRO FORMA PER SHARE EARNINGS
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER
1997 31, 1996
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Basic and diluted pro forma income per share:
Pro forma net income available to common Stock-
holders(1)..................................... $22,400,955 $10,614,060
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Weighted average shares outstanding(2)-basic.... 15,258,334 15,258,334
Weighted average shares outstanding(2)-diluted.. 15,358,302 15,258,334
Pro forma earnings per share(2)-basic........... $1.47 $0.70
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Pro forma earnings per share(2)-diluted......... $1.46 $0.70
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(1) Prior to January 31, 1998, the Company was treated as an S corporation for
federal and state income tax purposes. The pro forma presentation reflects
the provision for income taxes as if the Company had always been fully
subject to federal and state taxes as a C corporation at the effective tax
rate of 42%.
(2) Options have been considered to be outstanding since grant date at the
initial offering price of $12.00 per share and an option exercise price of
$4.06 per share has been used in applying the treasury stock method in
accordance with SFAS No. 128. Weighted average shares outstanding includes
the effect of the assumed issuance of 1,258,334 shares of common stock to
generate sufficient cash to pay the Shareholder Distribution Amount of
$15.1 million as of December 31, 1997.
STATEMENT RE COMPUTATION OF SUPPLEMENTAL PRO FORMA PER SHARE EARNINGS
GIVING EFFECT TO RETIREMENT OF DEBT
Supplemental pro forma net income available to
common
Stockholders(1)................................. $22,933,960 $10,812,289
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Supplemental weighted average shares outstand-
ing(2)-basic.................................... 16,133,334 16,133,334
Supplemental weighted average shares outstand-
ing(2)-diluted.................................. 16,233,302 16,133,334
Supplemental pro forma earnings per share(2)-ba-
sic............................................. $1.42 $0.67
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Supplemental pro forma earnings per share(2)-di-
luted........................................... $1.41 $0.67
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(1) The supplemental pro forma presentation reflects (a) the provision for
income taxes described in Note (1) above; and (b) the effect on earnings
during the periods presented if the Notes payable to stockholders and
related accrued and unpaid interest ($10.5 million at December 31, 1997)
were retired in July 1996, the inception of such Notes.
(2) Weighted average shares outstanding includes (a) the effect of the options
and payment of the Shareholder Distribution Amount described in Note (2)
above; and (b) the effect of the assumed issuance of 875,000 shares of
common stock in July 1996 to retire the Notes payable to stockholders.