Earnings per Share (CPE Inc. only)

9 Months Ended

Sep. 30, 2011

Earnings per Share (CPE Inc. only)

Earnings per Share (CPE Inc. only)

8.  Earnings per Share (CPE Inc. only)

Dilutive potential shares of common stock include restricted shares and options issued under our Long Term Incentive Plan (“LTIP”) and, until the date of the Secondary Offering, common stock that might have been issued in exchange for CPE Resources common membership units held by Rio Tinto.  For 2010, until the date of the Secondary Offering, we applied the if-converted method to determine dilution from the exchange of common membership units.  In applying the if-converted method, we assumed that Rio Tinto had exchanged all of its common 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’s 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’s income to CPE Inc.’s controlling interest in CPE Resources.  The calculation of such additional income tax expense reflected our combined federal and state statutory rate of 36%.

We apply the treasury stock method to determine dilution from restricted stock and options.

The following table summarizes the calculation of diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2011		2010			2011		2010
Numerator for calculation of diluted earnings per share:
Income (loss) attributable to controlling interest stockholders	$	24,611	$	(6,599	)	$	145,978	$	20,856
Add back income attributable to the noncontrolling interest, net of estimated
Numerator for diluted income per share	$	24,611	$	(6,599	)	$	145,978	$	20,856
Denominator for basic income per share — weighted-average shares outstanding	60,007		30,600			60,003		30,600
Weighted-average common stock from assumed exchange of CPE Resources common membership units held by noncontrolling
Dilutive effect of stock equivalents	638		—			603		—
Denominator for diluted earnings per share	60,645		30,600			60,606		30,600
Diluted earnings (loss) per share	$	0.41	$	(0.22	)	$	2.41	$	0.68

For the periods presented, the following items were excluded from the diluted earnings per share calculation because they were anti-dilutive (in thousands):

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2011	2010	2011	2010
CPE Resources common membership units held by noncontrolling interest	—	29,652	—	29,568
Restricted stock	1	594	15	591
Options outstanding	78	990	76	1,001
Employee stock purchase plan	3	—	3	—