23. Earnings Per Share

Earnings per share are calculated using the two-class method. The calculation of basic earnings per share requires an allocation of earnings to all securities that participate in dividends with common shares, such as unvested restricted stock and preferred participating stock, to the extent that each security may share in the entity's earnings. Basic earnings per share are calculated by dividing undistributed earnings allocated to common stock by the weighted average number of common shares outstanding. Dilutive earnings per share considers the dilutive effect of common stock equivalents, including stock options, warrants to purchase shares of common stock, and preferred stock that can be converted into shares of common stock. Dilutive earnings per share are calculated by dividing undistributed earnings allocated to common stockholders by the sum of the weighted average number of common shares outstanding and the weighted average number of common stock equivalents outstanding, provided those common stock equivalents are dilutive. Potentially dilutive common stock equivalents are excluded from the calculation of diluted earnings per share in periods in which the effect would reduce the loss per share or increase the income per share (i.e., when the common stock equivalents are antidilutive.) To the extent there is an undistributed loss for the period, that loss is allocated entirely to the weighted average number of common shares as the participating security holders have no contractual obligation to share in losses.

For the year ended December 31, 2011, common stock equivalents included in the calculation of diluted earnings per share were 25,002 stock options outstanding to purchase shares of common stock. Weighted-average common stock equivalents that were considered antidilutive and were not included in the calculation of diluted earnings per share at December 31, 2011 were 615,031 stock options outstanding to purchase shares of common stock, 3,805,513 warrants to purchase shares of common stock and 2,598,427 shares of convertible Series C Preferred and Series F Preferred.

Due to the net loss for the years ended December 31, 2010 and 2009, all common stock equivalents were considered antidilutive and were not included in the computation of basic or diluted earnings per share. At December 31, 2010, actual common stock equivalents consisted of 910,103 stock options outstanding to purchase shares of common stock, 3,800,147 warrants to purchase shares of common stock, convertible Series C preferred stock which could be converted into 2,598,697 shares of common, convertible Series D preferred stock which could be converted into 405,330 shares of common stock and convertible Series E preferred stock which could be converted into 455,049 shares of common stock. At December 31, 2009, actual common stock equivalents consisted of 813,099 stock options outstanding to purchase shares of common stock, 2,862,647 warrants to purchase shares of common stock, and the convertible Series A preferred stock which could be converted into 6,000,000 shares of common stock.

The following table provides earnings per share calculation details for the years ended December 31, 2011, 2010 and 2009:


	For the Years Ended December 31,
	2011			2010			2009
	(dollars in thousands, except per share amounts)
Net income (loss)	$	91,115		$	(53,823	)	$	(31,550	)
Preferred dividends and discounts		(9,145	)		(9,699	)		(11,483	)
Implied noncash preferred dividend		(10,501	)		(15,756	)		—

Net income (loss) applicable to common stockholders	$	71,469		$	(79,278	)	$	(43,033	)

Undistributed earnings allocated to common shares	$	67,227		$	(79,278	)	$	(43,033	)
Undistributed earnings allocated to unvested restricted participating shares		1,430			—			—
Undistributed earnings allocated to preferred participating shares		2,812			—			—

Total undistributed earnings	$	71,469		$	(79,278	)	$	(43,033	)

Basic earnings (loss) per common share	$	3.45		$	(5.27	)	$	(4.10	)

Weighted average common shares outstanding		19,474,273			15,049,868			10,492,911
Effective dilutive potential common shares		25,002			—			—

Diluted weighted average common shares outstanding		19,499,275			15,049,868			10,492,911

Diluted earnings (loss) per common share*	$	3.45		$	(5.27	)	$	(4.10	)

*	Diluted earnings per share are calculated by dividing undistributed earnings allocated to common shares by the total diluted weighted-average number of common shares outstanding.