Income per Common Share

6 Months Ended

Jun. 30, 2012

Income per Common Share

Income per Common Share

7.  Income per Common Share

The Company applies the two-class method for calculating and presenting income per common share. The two-class method is an earnings allocation formula that determines earnings per share for each class of stock participation rights in undistributed earnings. Effective January 1, 2009 the Financial Accounting Standards Board (“FASB”) clarified that share based payment awards that have not yet vested meet the definition of a participating security provided the right to receive the dividend is non-forfeitable and non-contingent. Participating securities are defined as securities that participate in dividends with common stock according to a predetermined formula. These participating securities should be included in the computation of basic earnings per share under the two class method. Based upon the clarification made by FASB, the Company concluded that its non-vested restricted stock awards meet the definition of a participating security and should be included in the Company’s computation of basic earnings per share.

The following table sets forth for the periods indicated the calculation of net income per share in the Company’s consolidated statement of operations and the differences between basic weighted average shares outstanding and diluted weighted average shares outstanding used to compute basic and diluted earnings per share, respectively:

	For the Three Months				For the Six Months
	Ended June 30,				Ended June, 30
	2011		2012		2011		2012
	(in thousands, except per share data)
Numerator:
Net income attributable to Select Medical Holdings Corporation	$	11,719	$	43,172	$	45,391	$	84,714
Less: Earnings allocated to unvested restricted stockholders	125		707		486		1,338
Net income available to common stockholders	$	11,594	$	42,465	$	44,905	$	83,376
Denominator:
Weighted average shares – basic	152,603		138,456		152,720		139,941
Effect of dilutive securities:
Stock options	278		229		231		221
Weighted average shares – diluted	152,881		138,685		152,951		140,162
Basic income per common share	$	0.08	$	0.31	$	0.29	$	0.60
Diluted income per common share	$	0.08	$	0.31	$	0.29	$	0.59

The following share amounts are shown here for informational and comparative purposes only since their inclusion would be anti-dilutive:

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2011	2012	2011	2012
	(in thousands)
Stock options	1,691	1,684	2,400	1,699