EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

EARNINGS PER SHARE

4. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period.

Our unvested restricted shares contain non-forfeitable rights to dividends, and therefore are considered to be participating securities; the calculation of basic and diluted earnings per share excludes from the numerator net income attributable to the unvested restricted shares, and excludes the impact of those shares from the denominator.

For purposes of determining diluted earnings per share, we have elected a policy to assume that the principal portion of the Notes (see Note 3) is settled in cash. As such, the principal portion of the Notes has no effect on either the numerator or denominator when determining diluted earnings per share. Any conversion gain is assumed to be settled in shares and is incorporated in diluted earnings per share using the treasury method. The warrants issued in conjunction with the issuance of the Notes (see Note 3) are considered to be dilutive when they are in-the-money relative to our average stock price during the period; the bond hedge purchased in conjunction with the issuance of the Notes is always considered to be anti-dilutive.

For periods of net income, and when the effects are not anti-dilutive, we calculate diluted earnings per share by dividing net income available to common shareholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options, unvested restricted stock awards, stock purchase warrants, and any conversion gain on our Notes (see Note 3), using the treasury stock method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share.

Earnings per share for the three months ended March 31, 2015 and 2014 are calculated for basic and diluted earnings per share as follows: 

	Basic				Diluted
(in thousands)	Three months ended March 31,				Three months ended March 31,
	2015		2014		2015		2014
Net income	$	4,369	$	3,359	$	4,369	$	3,359
Net income allocated to warrants		-		(19)		-		(19)
Net income allocated to restricted stock		(23)		(15)		(23)		(15)
Net income from continuing operations allocated to common shares	$	4,346	$	3,325	$	4,346	$	3,325
Basic Weighted-Average Shares Outstanding		11,326		9,991		11,326		9,991
Dilutive effect of stock options						236		10
Diluted Weighted-Average Shares Outstanding						11,562		10,001
Earnings Per Share	$	0.38	$	0.33	$	0.38	$	0.33

The number of anti-dilutive shares, which have been excluded from the computation of diluted earnings per share, including the shares underlying the Notes, was 4.6 million and 0.7 million for the three months ended March 31, 2015 and 2014. Anti-dilutive shares consist of out-of-the-money Class C Special stock, out-of-the-money common stock options, common stock options that are anti-dilutive when calculating the impact of the potential dilutive common shares using the treasury stock method, and out-of-the-money warrants exercisable for common stock. 

As of March 31, 2015, we had 0.5 million options outstanding to purchase common stock, 60 thousand unvested restricted stock awards, and 2.5 million warrants to purchase common stock.