Note 20 Earnings (Losses) Per Share

ASC 260, Earnings per Share, requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings (losses) per share. We have granted and expect to continue to grant to employees restricted stock grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities under ASC 260. As such, we are required to include these grants in the calculation of our basic earnings (losses) per share and calculate basic earnings (losses) per share using the two-class method. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings.

Basic earnings (losses) per share is computed utilizing the two-class method and is calculated based on the weighted-average number of common shares outstanding during the periods presented.

Diluted earnings (losses) per share is computed using the weighted-average number of common and common equivalent shares outstanding during the periods utilizing the two-class method for stock options and unvested restricted stock.

	Year Ended December 31,
	2014			2013			2012
	(In thousands, except per share amounts)
BASIC EPS:
Net income (loss) (numerator):
Income (loss) from continuing operations, net of tax	$	(669,265	)	$	158,341		$	232,974
Less: net (income) loss attributable to noncontrolling interest		(1,415	)		(7,180	)		(621	)
Less: loss on redemption of subsidiary preferred stock		(1,688	)		—			—
Less: (earnings) losses allocated to unvested shareholders		10,595			(1,277	)		—

Numerator for basic earnings per share:
Adjusted income (loss) from continuing operations	$	(661,773	)	$	149,884		$	232,353

Income (loss) from discontinued operations	$	21		$	(11,179	)	$	(67,526	)

Weighted-average number of shares outstanding—basic		290,694			294,182			289,965
Earnings (losses) per share:
Basic from continuing operations	$	(2.28	)	$	0.51		$	0.80
Basic from discontinued operations		—			(0.04	)		(0.23	)

Total Basic	$	(2.28	)	$	0.47		$	0.57

DILUTED EPS:
Income (loss) from continuing operations attributed to common shareholders	$	(661,773	)	$	149,884		$	232,353
Add: effect of reallocating undistributed earnings of unvested shareholders		—			—			—

Adjusted income (loss) from continuing operations attributed to common shareholders	$	(661,773	)	$	149,884		$	232,353

Income (loss) from discontinued operations	$	21		$	(11,179	)	$	(67,526	)

Weighted-average number of shares outstanding—basic		290,694			294,182			289,965
Add: dilutive effect of potential common shares		—			2,410			2,358

Weighted-average number of diluted shares outstanding		290,694			296,592			292,323
Earnings (losses) per share:
Diluted from continuing operations	$	(2.28	)	$	0.51		$	0.79
Diluted from discontinued operations		—			(0.04	)		(0.23	)

Total Diluted	$	(2.28	)	$	0.47		$	0.56

For all periods presented, the computation of diluted earnings (losses) per Nabors' share excludes outstanding stock options with exercise prices greater than the average market price of Nabors' common shares, because their inclusion would be anti-dilutive and because they are not considered participating securities. The average number of options that were excluded from diluted earnings (losses) per share that would potentially dilute earnings per share in the future was 12,950,249, 11,642,417 and 14,200,915 shares during 2014, 2013 and 2012, respectively. In any period during which the average market price of Nabors' common shares exceeds the exercise prices of these stock options, such stock options will be included in our diluted earnings (losses) per share computation using the if-converted method of accounting. Restricted stock is included in our basic and diluted earnings (losses) per share computation using the two-class method of accounting in all periods because such stock is considered participating securities.