Earnings per share

We use income from continuing operations attributable to Alexandria’s common stockholders as the “control number” in determining whether potential common shares are dilutive or antidilutive to earnings per share. Pursuant to the presentation and disclosure literature on gains or losses on sales or disposals by REITs and earnings per share required by the SEC and the FASB, gains or losses on sales or disposals by a REIT that do not qualify as discontinued operations are classified below income from discontinued operations in the consolidated statements of income and included in the numerator for the computation of earnings per share for income from continuing operations.

The land parcels we sold during the years ended December 31, 2013, 2012, and 2011 did not meet the criteria for classification as discontinued operations because the land parcels did not have significant operations prior to disposition. Accordingly, for the years ended December 31, 2013, 2012, and 2011, we classified approximately $4.8 million, $1.9 million, and $46 thousand respectively, as gain on sales of land parcels below income from discontinued operations in the accompanying consolidated statements of income, and included the gain in income from continuing operations attributable to Alexandria’s common stockholders in the “control number,” or numerator for computation of earnings per share.

We account for unvested restricted stock awards that contain nonforfeitable rights to dividends as participating securities and include these securities in the computation of earnings per share using the two-class method. Our Series D Convertible Preferred Stock is not a participating security, and is not included in the computation of earnings per share using the two-class method. Under the two-class method, we allocate net income after preferred stock dividends, preferred stock redemption charge, and amounts attributable to noncontrolling interests to common stockholders and unvested restricted stock awards based on their respective participation rights to dividends declared (or accumulated) and undistributed earnings. Diluted earnings per share is computed using the weighted average shares of common stock outstanding determined for the basic earnings per share computation plus the effect of any dilutive securities, including the dilutive effect of stock options using the treasury stock method and potential common shares issuable upon conversion of our 8.00% unsecured senior convertible notes (“8.00% Unsecured Senior Convertible Notes”), during the period the notes were outstanding.

The table below is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the years ended December 31, 2013, 2012, and 2011 (in thousands, except per share amounts):



	Year Ended December 31,
	2013			2012			2011
Income from continuing operations	$	134,525		$	94,848		$	117,270
Gain on sales of land parcels	4,824			1,864			46
Net income attributable to noncontrolling interests	(4,032		)	(3,402		)	(3,975		)
Dividends on preferred stock	(25,885		)	(27,328		)	(28,357		)
Preferred stock redemption charge	—			(5,978		)	—
Net income attributable to unvested restricted stock awards	(1,581		)	(1,190		)	(1,088		)
Income from continuing operations attributable to Alexandria’s common stockholders – basic and diluted	107,851			58,814			83,896
Income from discontinued operations	900			8,816			18,077
Net income attributable to Alexandria’s common stockholders – basic and diluted	$	108,751		$	67,630		$	101,973

Weighted average shares of common stock outstanding – basic and diluted	68,038			62,160			59,078

Earnings per share attributable to Alexandria’s common stockholders – basic and diluted:
Continuing operations	$	1.59		$	0.95		$	1.42
Discontinued operations	0.01			0.14			0.31
Earnings per share – basic and diluted	$	1.60		$	1.09		$	1.73

For purposes of calculating diluted earnings per share, we did not assume conversion of our 8.00% Unsecured Senior Convertible Notes for the years ended December 31, 2013, 2012, and 2011, since the impact was antidilutive to earnings per share attributable to Alexandria’s common stockholders from continuing operations during those periods.

For purposes of calculating diluted earnings per share, we did not assume conversion of our Series D Convertible Preferred Stock for the years ended December 31, 2013, 2012, and 2011, since the impact was antidilutive to earnings per share attributable to Alexandria’s common stockholders from continuing operations during those periods.

Our calculation of weighted average diluted shares for the year ending December 31, 2011, would have included additional shares related to our 3.70% Unsecured Senior Convertible Notes if the average market price of our common stock had been higher than the conversion price ($117.36 as of December 31, 2011). For the year ended December 31, 2011, the weighted average shares of common stock related to our 3.70% Unsecured Senior Convertible Notes have been excluded from diluted weighted average shares of common stock because the average market price of our common stock was lower than the conversion price, and the impact of conversion would have been antidilutive to earnings per share attributable to Alexandria’s common stockholders from continuing operations during the period. None of our 3.70% Unsecured Senior Convertible Notes were outstanding as of December 31, 2013 and 2012.