Earnings Per Share

Basic earnings per share is computed by dividing earnings available to MasTec’s common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing earnings by the number of fully diluted shares, which includes the effect of dilutive potential issuances of common shares, as determined using earnings from continuing operations. Potentially dilutive common shares include outstanding stock options and unvested restricted share awards, as calculated under the treasury stock method, as well as shares associated with the Company’s outstanding convertible debt securities.

The following table provides details of the Company’s earnings per share calculations for the periods indicated (in thousands, except per share amounts). Note that earnings per share calculations may contain slight summation differences due to rounding.



	Years Ended December 31,
	2012			2011		2010
Basic
Net income attributable to MasTec:
Net income from continuing operations	$	116,639		$	97,454	$	66,166
Net (loss) income from discontinued operations	(9,213		)	8,547		24,362
Basic net income attributable to MasTec	$	107,426		$	106,001	$	90,528
Weighted average shares outstanding	78,275			82,182		76,132
Basic earnings (loss) per share:
Continuing operations	$	1.49		$	1.19	$	0.87
Discontinued operations	(0.12		)	0.10		0.32
Total basic earnings per share	$	1.37		$	1.29	$	1.19
Diluted
Net income attributable to MasTec:
Basic net income from continuing operations	$	116,639		$	97,454	$	66,166
Interest expense on Original 4.0% Notes, net of tax	234			331		2,667
Interest expense on Original 4.25% Notes, net of tax	77			154		2,464
Diluted net income from continuing operations	$	116,950		$	97,939	$	71,297
Net (loss) income from discontinued operations	(9,213		)	8,547		24,362
Diluted net income attributable to MasTec	$	107,737		$	106,486	$	95,659
Shares:
Basic weighted average shares outstanding	78,275			82,182		76,132
Dilutive common stock equivalents	888			1,127		994
Dilutive premium shares, New 4.0% Notes	1,044			1,067		—
Dilutive premium shares, New 4.25% Notes	1,074			1,095		—
Dilutive shares, Original 4.0% Notes	612			862		7,297
Dilutive shares, Original 4.25% Notes	194			383		6,462
Diluted weighted average shares outstanding	82,087			86,716		90,885
Diluted earnings (loss) per share:
Continuing operations	$	1.42		$	1.13	$	0.78
Discontinued operations	(0.11		)	0.10		0.27
Total diluted earnings per share	$	1.31		$	1.23	$	1.05

For the years ended December 31, 2012, 2011 and 2010, a total of 2,032, 9,479 and 1,031,894 weighted average anti-dilutive common stock equivalents were not included in the Company’s diluted earnings per share calculations, respectively.

Senior Convertible Notes – Diluted Share Impact

The Company has $215 million of outstanding convertible notes. During the first quarter of 2011, the Company exchanged $105.3 million of its original 4.0% senior convertible notes (the “Original 4.0% Notes”) and $97.0 million of its original 4.25% senior convertible notes (the “Original 4.25% Notes” and, together with the Original 4.0% Notes, the “Original Notes”) for identical principal amounts of new 4.0% and 4.25% senior convertible notes (the “New 4.0% Notes” and the “New 4.25% Notes,” respectively and, collectively, the “New Notes”). The terms of the New Notes are substantially identical to the Original Notes, except that the New Notes have an optional physical (common share), cash or combination settlement feature and contain certain conditional conversion features. Due to the optional cash settlement feature and management’s intent to settle the principal amount thereof plus accrued interest in cash, the conversion shares underlying the outstanding principal amount of the New Notes, totaling approximately 13.0 million shares, are not required to be included in the Company’s diluted share count. If, however, the Company’s average stock price per share during the corresponding periods exceeds the $15.76 conversion price for the New 4.0% Notes or the $15.48 conversion price for the New 4.25% Notes, the weighted average of the resulting value in excess of the principal amount, converted to shares at the market price, is included in the Company’s weighted average diluted share count (“premium shares”).

The number of common shares issuable upon conversion of the Company’s Original Notes is reflected in the calculation of weighted average diluted earnings per share for the corresponding periods by application of the “if-converted” method to the extent their effect on the computation of earnings per share from continuing operations is dilutive. Under the “if-converted” method, net income from continuing operations is adjusted to add back the after-tax amount of interest recognized in the period associated with the convertible notes, and correspondingly, the convertible notes are assumed to have been converted with the resulting common shares added to weighted average shares outstanding.

The following table summarizes the principal amounts of the Company’s outstanding convertible notes for the periods indicated, including their respective classification within the computation of earnings per share for each period (in millions):



	Years Ended December 31,
	2012		2011		2010
Dilutive:
New 4.0% Notes (1)	$	105.3	$	105.3	N/A
New 4.25% Notes (1)	97.0		97.0		N/A
Original 4.0% Notes (2)	9.7		9.7		115.0
Original 4.25% Notes (2)	3.0		3.0		100.0
Total principal amount, dilutive outstanding convertible notes	$	215.0	$	215.0	$	215.0

(1)Dilutive shares associated with the New Notes are attributable to the premium over the respective conversion prices.

(2)Dilutive shares associated with the Original Notes are attributable to the underlying principal amounts.

The Company’s average stock price for the years ended December 31, 2012 and 2011 exceeded the conversion prices of the New Notes. The number of premium shares included in the Company’s diluted share count varies with fluctuations in the Company’s actual share price for the related periods. Higher share prices result in a greater number of equivalent premium shares. Details of the calculation underlying the number of premium shares included in the Company’s diluted share count for the periods indicated are as follows (in thousands, except per share amounts):



	As of and for the Year Ended December 31, 2012				As of and for the Year Ended December 31, 2011
	New 4.0% Notes		New 4.25% Notes		New 4.0% Notes		New 4.25% Notes
Principal amount	$	105,322	$	97,000	$	105,322	$	97,000
Conversion price per share	$	15.76	$	15.48	$	15.76	$	15.48
Number of conversion shares, principal amount	6,683		6,268		6,683		6,268
Weighted average actual per share price	$	18.68	$	18.68	$	18.90	$	18.88
Excess over principal amount	$	19,494	$	20,064	$	20,968	$	21,139
Weighted average equivalent premium shares	1,044		1,074		1,067		1,095

See Note 14 - Common Stock Activity.