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. The potential issuance of common shares upon the exercise, conversion or vesting, as applicable, of 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, may be dilutive.

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



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2013			2012			2013			2012
Basic
Net income attributable to MasTec:
Net income from continuing operations	$	35,425		$	31,164		$	54,742		$	42,859
Net (loss) income from discontinued operations	(484		)	(1,072		)	(1,431		)	1,405
Basic net income attributable to MasTec	$	34,941		$	30,092		$	53,311		$	44,264
Weighted average shares outstanding	76,741			80,249			76,675			80,432
Basic earnings (loss) per share:
Continuing operations	$	0.46		$	0.39		$	0.71		$	0.53
Discontinued operations	(0.01		)	(0.01		)	(0.02		)	0.02
Total basic earnings per share	$	0.46		$	0.37		$	0.70		$	0.55
Diluted
Net income attributable to MasTec:
Basic net income from continuing operations	$	35,425		$	31,164		$	54,742		$	42,859
Interest expense on original 4.0% notes, net of tax	59			59			118			116
Interest expense on original 4.25% notes, net of tax	20			19			39			39
Diluted net income from continuing operations	$	35,504		$	31,242		$	54,899		$	43,014
Net (loss) income from discontinued operations	(484		)	(1,072		)	(1,431		)	1,405
Diluted net income attributable to MasTec	$	35,020		$	30,170		$	53,468		$	44,419
Shares:
Basic weighted average shares outstanding	76,741			80,249			76,675			80,432
Dilutive common stock equivalents	776			799			781			815
Dilutive premium shares, new 4.0% notes	3,187			260			3,104			545
Dilutive premium shares, new 4.25% notes	3,048			352			2,971			615
Dilutive shares, original 4.0% notes	612			612			612			612
Dilutive shares, original 4.25% notes	194			194			194			194
Diluted weighted average shares outstanding	84,558			82,466			84,337			83,213
Diluted earnings (loss) per share:
Continuing operations	$	0.42		$	0.38		$	0.65		$	0.52
Discontinued operations	(0.01		)	(0.01		)	(0.02		)	0.02
Total diluted earnings per share	$	0.41		$	0.37		$	0.63		$	0.53

There were 123,077 and 61,878 weighted average anti-dilutive common stock equivalents from restricted share awards that were not included in the Company's diluted earnings per share calculations for the three and six month periods ended June 30, 2013, respectively. For the three and six month periods ended June 30, 2012, a total of 136,158 and 1,066 weighted average anti-dilutive common stock equivalents from restricted share awards, respectively, were not included in the Company’s diluted earnings per share calculations.

The Company’s Board of Directors authorized a $150 million share repurchase plan in 2011, under which the Company repurchased 4.6 million shares of common stock for $75.0 million during the year ended December 31, 2011. During the year ended December 31, 2012, the Company repurchased an additional 4.9 million shares under this plan for an aggregate purchase price of $75.0 million, which completed the share repurchase plan. The repurchased shares are held in the Company’s treasury. See Note 14 - Common Stock Activity.

Senior Convertible Notes – Diluted Share Impact

The Company has $215 million of outstanding convertible notes, including $105.3 million of new 4.0% senior convertible notes (the “New 4.0% Notes”) and $97.0 million of new 4.25% senior convertible notes (the “New 4.25% Notes” and, together with the New 4.0% Notes, the “New Convertible Notes”). The Company also holds $9.6 million of original 4.0% senior convertible notes and $3.0 million of original 4.25% senior convertible notes, (the “Original 4.0% Notes” and the “Original 4.25% Notes,” respectively and, collectively, the “Original Convertible Notes”). The New Convertible 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 New Convertible Notes, totaling approximately 13.0 million shares if fully settled in common stock, are not included in the Company’s diluted share count. If, however, the Company’s average stock price per share exceeds the respective conversion prices for the New Convertible Notes during a given reporting period, the resulting weighted average value of the respective number of conversion shares underlying the New Convertible Notes in excess of the principal amount of the notes, converted to shares at the market price, is included in the Company’s diluted share count (such shares are referred to as “premium shares”). See below and Note 10 - Debt of the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2012.

The number of common shares issuable upon conversion of the Company’s Original Convertible Notes is determined for the corresponding periods by application of the “if-converted” method to the extent the effect on earnings per share from continuing operations is dilutive. Under the “if-converted” method, net income attributable to MasTec from continuing operations is adjusted to add back the after-tax amount of interest recognized in the period associated with the Original Convertible Notes, and correspondingly, the Original 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 the periods indicated (in millions):



	Three and Six Months Ended June 30,
	2013		2012
Dilutive:
New 4.0% Notes ⁽¹⁾	$	105.3	$	105.3
New 4.25% Notes ⁽¹⁾	97.0		97.0
Original 4.0% Notes ⁽²⁾	9.6		9.7
Original 4.25% Notes ⁽²⁾	3.0		3.0
Total principal amount, dilutive outstanding convertible notes	$	215.0	$	215.0


(1)	Dilutive shares associated with the New Convertible Notes are attributable to the weighted average premium value, in shares, of the conversion shares underlying the New Convertible Notes in excess of the respective principal amounts thereof.


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

The Company’s average stock price for the three and six month periods ended June 30, 2013 and 2012 exceeded the conversion prices of the New Convertible 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 Three Months Ended June 30,								As of and for the Six Months Ended June 30,
	2013				2012				2013				2012
	New 4.0% Notes		New 4.25% Notes		New 4.0% Notes		New 4.25% Notes		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	$	105,322	$	97,000	$	105,322	$	97,000
Conversion price per share	$	15.76	$	15.48	$	15.76	$	15.48	$	15.76	$	15.48	$	15.76	$	15.48
Number of conversion shares, principal amount	6,683		6,268		6,683		6,268		6,683		6,268		6,683		6,268
Weighted average actual per share price	$	30.13	$	30.13	$	16.40	$	16.40	$	29.43	$	29.43	$	17.16	$	17.16
Excess over principal amount	$	96,021	$	91,837	$	4,261	$	5,777	$	91,325	$	87,433	$	9,345	$	10,545
Weighted average equivalent premium shares	3,187		3,048		260		352		3,104		2,971		545		615