NOTE 14 - EARNINGS (LOSS) PER SHARE/UNIT

We apply the two-class method of computing earnings per share, which requires the calculation of separate earnings per share amounts for our non-vested, time-based restricted stock awards with nonforfeitable dividends and for our common stock. Our non-vested, time-based restricted stock awards with nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. Our non-vested, time-based restricted stock awards with nonforfeitable dividends do not have such an obligation so they are not allocated losses.

In the third quarter of 2013 and 2012 and the first nine months of 2013 and 2012, our outstanding stock options were not included in the computation of diluted earnings per share, as the exercise price for our options was greater than the average market price of our common shares.

In the first nine months of 2012, our basic and diluted earnings per share are based on basic weighted average common shares outstanding due to our loss from continuing operations.

Summit Hotel Properties, Inc.

A summary of the components used to calculate basic and diluted earnings per share follows (in thousands, except per share):

	Third Quarter						First Nine Months
	2013			2012			2013			2012
Numerator:
Income (loss) from continuing operations	$	1,116		$	112		$	12,270		$	(2,602	)
Less: Preferred dividends	4,147			1,156			10,443			3,469
Allocation to participating securities	21			12			52			24
Attributable to noncontrolling interest	155			(169		)	404			(1,488		)
Income (loss) attributable to common stockholders from continuing operations	(3,207		)	(887		)	1,371			(4,607		)
Income (loss) attributable to common stockholders from discontinued operations	(1,631		)	1,281			(4,109		)	860

Net income (loss) attributable to common stockholders	$	(4,838	)	$	394		$	(2,738	)	$	(3,747	)

Denominator:
Weighted average common shares outstanding - basic	68,157			31,308			65,460			29,713
Dilutive effect of equity-based compensation awards	457			193			394			107

Weighted average common shares outstanding - diluted	68,614			31,501			65,854			29,820

Earnings per common share - basic and diluted:
Net income (loss) from continuing operations	$	(0.05	)	$	(0.03	)	$	0.02		$	(0.16	)
Net income (loss) from discontinued operations	(0.02		)	0.04			(0.06		)	0.03

Net income (loss)	$	(0.07	)	$	0.01		$	(0.04	)	$	(0.13	)

Summit Hotel OP, LP

A summary of the components used to calculate basic and diluted earnings per unit follows (in thousands, except per unit):

	Third Quarter						First Nine Months
	2013			2012			2013			2012
Numerator:
Income (loss) from continuing operations	$	1,116		$	112		$	12,270		$	(2,602	)
Less: Preferred dividends	4,147			1,156			10,443			3,469
Attributable to noncontrolling interest	272			—			324			—
Income (loss) attributable to common unit holders from continuing operations	(3,303		)	(1,044		)	1,503			(6,071		)
Income (loss) attributable to common unit holders from discontinued operations	(1,697		)	1,529			(4,297		)	1,081

Net income (loss) attributable to common unit holders	$	(5,000	)	$	485		$	(2,794	)	$	(4,990	)

Denominator:
Weighted average common units outstanding - basic	70,917			37,393			68,476			37,385
Dilutive effect of equity-based compensation awards	457			193			394			107

Weighted average common units outstanding - diluted	71,374			37,586			68,870			37,492

Earnings per common unit - basic and diluted:
Net income (loss) from continuing operations	$	(0.05	)	$	(0.03	)	$	0.02		$	(0.16	)
Net income (loss) from discontinued operations	(0.02		)	0.04			(0.06		)	0.03

Net income (loss)	$	(0.07	)	$	0.01		$	(0.04	)	$	(0.13	)