Note 3 – Earnings Per Share

Basic earnings per share is computed by dividing net income or loss 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 net income or loss available to MasTec’s common shareholders 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, including the potential issuance of common shares upon the exercise, conversion or vesting of outstanding stock options and unvested restricted shares, as calculated under the treasury stock method, as well as shares associated with the Company’s convertible debt securities, which matured and were converted in 2014.

The following table provides details underlying the Company’s earnings per share calculations for the periods indicated (in thousands):



	For the Years Ended December 31,
	2014			2013			2012
Net income attributable to MasTec:
Net income, continuing operations - basic^(a)	$	122,375		$	147,492		$	116,639
Interest expense, net of tax, 2009 Convertible Notes	181			315			311
Net income, continuing operations - diluted	$	122,556		$	147,807		$	116,950
Net loss from discontinued operations - basic and diluted ^(a)	(6,452		)	(6,542		)	(9,213		)
Net income attributable to MasTec - diluted	$	116,104		$	141,265		$	107,737
Weighted average shares outstanding:
Weighted average shares outstanding - basic	79,953			76,923			78,275
Dilutive common stock equivalents	813			777			883
Dilutive premium shares, 2011 Convertible Notes	4,971			6,395			2,118
Dilutive shares, 2009 Convertible Notes	459			806			806
Weighted average shares outstanding - diluted	86,196			84,901			82,082


(a)	Calculated as total net income (loss) less amounts attributable to non-controlling interests.

Convertible Notes

In December 2014, $100 million aggregate principal amount of 4.25% senior convertible notes (the “4.25% Convertible Notes”) matured, at which time the holders elected to convert the notes. The Company paid $97 million in cash and issued 2.4 million shares of common stock in respect of such notes. The 4.25% Convertible Notes were composed of $97 million of 4.25% Convertible Notes issued in 2011 (the “2011 4.25% Notes”) and $3 million of 4.25% Convertible Notes issued in 2009 (the “2009 4.25% Notes”). Additionally, in June 2014, $115 million aggregate principal amount of 4.0% senior convertible notes (the “4.0% Convertible Notes”) matured and were converted and the Company paid $105 million in cash and issued 4.2 million shares of common stock in respect thereof. The 4.0% Convertible Notes were composed of $105 million of 4.0% Convertible Notes issued in 2011 (the “2011 4.0% Notes”) and approximately $10 million of 4.0% Convertible Notes issued in 2009 (the “2009 4.0% Notes”). The 2009 4.0% Notes and the 2009 4.25% Notes are collectively referred to as the “2009 Convertible Notes,” and the 2011 4.0% Notes and the 2011 4.25% Notes are collectively referred to as the “2011 Convertible Notes.” See Note 10 - Debt for additional information.

Until their maturity in 2014, dilutive shares associated with the 2009 Convertible Notes were attributable to the underlying principal amounts and were reflected in the calculation of weighted average diluted earnings per share for the corresponding periods by application of the “if-converted” method. The 2011 Convertible Notes had an optional cash settlement feature, which allowed the Company to settle the principal amount in cash. Until their maturity in 2014, dilutive shares associated with the 2011 Convertible Notes were derived from the premium value of the notes in excess of their principal amounts, as calculated using the treasury stock method. These shares were referred to as “premium shares.”

The 4.0% Convertible Notes were convertible at $15.76 per share and the 4.25% Convertible Notes were convertible at $15.48 per share. The calculations 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 Years Ended December 31,
	2013				2012
Premium Share Information:	2011 4.0% Notes		2011 4.25% Notes		2011 4.0% Notes		2011 4.25% Notes
Number of conversion shares, principal amount	6,683		6,268		6,683		6,268
Per share price, actual average	$	30.86	$	30.86	$	18.68	$	18.68
Premium value	$	100,911	$	96,423	$	19,494	$	20,064
Premium shares	3,270		3,125		1,044		1,074

In addition to the premium shares described above, there were 5.0 million equivalent premium shares included in the Company’s dilutive share calculations for the year ended December 31, 2014 related to the 2011 Convertible Notes, as calculated based on the average price per share of the Company’s common stock from the beginning of the year through the dates of maturity of the respective notes.

Diluted Shares, Other Information

For the year ended December 31, 2014, there were a total of 244,623 weighted average common stock equivalents that were not included in the diluted earnings per share calculation because their effect would have been anti-dilutive. For the year ended December 31, 2013, there were no anti-dilutive common stock equivalents and for the year ended December 31, 2012, there were 8,313 weighted average common stock equivalents that were not included in the diluted earnings per share calculations.