Earnings per share (EPS)

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 EPS. Pursuant to the presentation and disclosure literature on gains or losses on sales or disposals by REITs and EPS 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 EPS for income from continuing operations.

The land parcels we sold during the three and nine months ended September 30, 2014 and 2013, 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 nine months ended September 30, 2014 and 2013, we classified approximately $805 thousand and $772 thousand, respectively, as gain on sale of land parcel below income from discontinued operations, net, 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 EPS.

We account for unvested restricted stock awards that contain nonforfeitable rights to dividends as participating securities and include these securities in the computation of EPS using the two-class method. Our Series D cumulative convertible preferred stock (“Series D Preferred Stock”) is not a participating security, and is not included in the computation of EPS 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 EPS is computed using the weighted average shares of common stock outstanding determined for the basic EPS computation plus the effect of any dilutive securities, including the dilutive effect of stock options using the treasury stock method, during the period the securities were outstanding.

The table below is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2014 and 2013 (dollars in thousands, except per share amounts):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Income from continuing operations	$	36,115		$	32,496		$	112,492		$	94,212
Gain on sales of land parcels	8			—			805			772
Dividends on preferred stock	(6,471		)	(6,472		)	(19,414		)	(19,414		)
Net income attributable to noncontrolling interests	(1,340		)	(960		)	(3,842		)	(2,922		)
Net income attributable to unvested restricted stock awards	(506		)	(442		)	(1,285		)	(1,187		)
Income from continuing operations attributable to Alexandria’s common stockholders – basic and diluted	27,806			24,622			88,756			71,461
(Loss) income from discontinued operations	(180		)	(43		)	(489		)	1,043
Net income attributable to Alexandria’s common stockholders – basic and diluted	$	27,626		$	24,579		$	88,267		$	72,504

Weighted average shares of common stock outstanding – basic and diluted	71,195			70,900			71,121			67,040

EPS attributable to Alexandria’s common stockholders – basic and diluted:
Continuing operations	$	0.39		$	0.35		$	1.25		$	1.06
Discontinued operations	—			—			(0.01		)	0.02
EPS – basic and diluted	$	0.39		$	0.35		$	1.24		$	1.08

For purposes of calculating diluted EPS, we did not assume conversion of our Series D Preferred Stock for the three and nine months ended September 30, 2014 and 2013, since the impact was antidilutive to EPS attributable to Alexandria’s common stockholders from continuing operations during those periods.