EXHIBIT 11.1 KEVCO, INC. COMPUTATION OF EARNINGS PER COMMON SHARE NINE MONTHS ENDED PRO FORMA SEPTEMBER 30, -------------------- -------------------- YEAR ENDED DECEMBER 31, -------------------- PRO FORMA 1996 1995 1994 1997 1996 ------ ------ ------ -------- ----------- (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Primary earnings Net income (1)....................... $8,932 $4,430 $3,396 $ 6,084 $ 6,744 Shares Average number of common shares outstanding......................... 5,429 4,395 4,395 6,811 4,395 Conversion of options issued and outstanding......................... 102 49 49 105 439 Other shares (2)..................... -- 502 502 -- 264 ------ ------ ------ -------- -------- Weighted average number of common shares outstanding as adjusted...... 5,531 4,946 4,946 6,916 5,098 ====== ====== ====== ======== ======== Primary earnings per common share...... $ 1.61 $ 0.90 $ 0.69 $ 0.88 $ 1.32 ====== ====== ====== ======== ======== Earnings per share is computed by dividing net income by the weighted average number of common shares and common share equivalents outstanding. Common share equivalents are computed using the treasury stock method. Under the treasury stock method, market price is used to determine the number of common share equivalents. (1) Net income for the years ended December 31, 1996, 1995 and 1994 and the nine months ended September 30, 1996 has been adjusted to reflect a provision for income taxes, which gives effect to the change in the Company's income tax status to a C corporation concurrently with the consummation of the Company's initial public offering. (See Note 1 to the consolidated financial statements of Kevco included in the Prospectus for which this forms an exhibit.) (2) Amount reflects the assumed issuance of Common Stock at the initial public offering price per share, less underwriting discount, to generate sufficient cash to fund the distribution of undistributed earnings previously taxed at the stockholder lever. (See Note 1 to the consolidated financial statements of Kevco included in the Prospectus for which this forms an exhibit.)