Earnings Per Share (CPE Inc. Only)

12 Months Ended

Dec. 31, 2012

Earnings Per Share (CPE Inc. Only)

Earnings Per Share (CPE Inc. Only)

18. Earnings Per Share (CPE Inc. Only)

        In connection with the IPO on November 19, 2009, CPE Inc. issued 30,600,000 shares of common stock to the public and used the proceeds to acquire a 51% interest in CPE Resources. On December 15, 2010, CPE Inc. priced the Secondary Offering of 29,400,000 shares of its common stock on behalf of Rio Tinto. In connection with the Secondary Offering, we exchanged 29,400,000 shares of common stock for the common membership units of CPE Resources held by Rio Tinto and completed the Secondary Offering, resulting in a divestiture of 100% of Rio Tinto's holdings in CPE Resources. As a result of this transaction, CPE Resources became a wholly-owned subsidiary of CPE Inc.

        On November 20, 2012, restricted stock issued to employees and directors in connection with the IPO vested, increasing the weighted-average shares outstanding for the period by 62,000 shares and decreasing the denominator for diluted earnings per share. The 276,000 shares retained as treasury shares during 2012 no longer impact this calculation.

        Dilutive potential shares of common stock include restricted stock and options issued under the LTIP (see Note 17). We apply the treasury stock method to determine dilution from restricted stock and options.

        Prior to the Secondary Offering, potential dilutive shares also included common stock that could have been issued in exchange for CPE Resources common membership units held by Rio Tinto members. In applying the if-converted method, we assumed that the Rio Tinto entities exchanged all of their membership units in CPE Resources for an equivalent number of shares of CPE Inc. common stock. In this calculation, we increased the numerator to include CPE Resources income attributable to the noncontrolling interest and decreased the numerator to reflect the additional income tax expense that results from the attribution of additional CPE Resources income to CPE Inc.'s controlling interest in CPE Resources. The calculation of such additional income tax expense reflects our combined federal and state statutory rate of 36%. At December 31, 2010, these shares were anti-dilutive and were excluded from the diluted earnings per share calculations.

        The following table summarizes the calculation of basic and diluted earnings per share for the years ended December 31, (in thousands, except per share amounts):

	2012		2011		2010
Numerator for calculation of basic earnings per share:
Net income	$	173,720	$	189,797	$	33,737
Denominator for basic income per share:
Weighted-average shares outstanding		60,093		60,004		31,889
Basic earnings per share	$	2.89	$	3.16	$	1.06
Numerator for calculation of diluted earnings per share:
Net income	$	173,720	$	189,797	$	33,737
Denominator for diluted income per share:
Weighted-average shares outstanding		60,093		60,004		31,889
Dilutive effect of stock equivalents		834		633		—
Denominator for diluted earnings per share		60,927		60,637		31,889
Diluted earnings per share	$	2.85	$	3.13	$	1.06

        For the years ended December 31, the following were excluded from the diluted earnings per share calculation because they were anti-dilutive (in thousands):

	2012		2011		2010
CPE Resources common membership units held by noncontrolling interest		—		—		25,695
Restricted stock		28		7		878
Options outstanding		57		73		1,032
Employee stock purchase plan		21		8		—