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 potentially dilutive 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 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.



	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2012			2011		2012			2011
Basic
Net income attributable to MasTec:
Net income from continuing operations before non-controlling interests	$	36,098		$	30,827	$	78,957		$	90,473
Net (loss) income from discontinued operations before non-controlling interests	(9,277		)	1,015		(7,872		)	6,969
Basic net income attributable to MasTec	$	26,821		$	31,842	$	71,085		$	97,442
Weighted average shares outstanding	76,194			84,732		79,009			81,982
Basic earnings (loss) per share attributable to MasTec:
Continuing operations	$	0.47		$	0.36	$	1.00		$	1.10
Discontinued operations	(0.12		)	0.01		(0.10		)	0.09
Total basic earnings per share	$	0.35		$	0.38	$	0.90		$	1.19
Diluted
Net income attributable to MasTec:
Basic net income from continuing operations before non-controlling interests	$	36,098		$	30,827	$	78,957		$	90,473
Interest expense on Original 4.0% Notes, net of tax	59			62		176			272
Interest expense on Original 4.25% Notes, net of tax	19			20		58			134
Diluted net income from continuing operations before non-controlling interests	$	36,176		$	30,909	$	79,191		$	90,879
Net (loss) income from discontinued operations before non-controlling interests	(9,277		)	1,015		(7,872		)	6,969
Diluted net income attributable to MasTec	$	26,899		$	31,924	$	71,319		$	97,848
Shares:
Basic weighted average shares outstanding	76,194			84,732		79,009			81,982
Dilutive common stock equivalents	887			1,049		842			1,207
Dilutive premium shares, New 4.0% Notes	794			1,366		631			1,166
Dilutive premium shares, New 4.25% Notes	845			1,371		694			1,187
Dilutive shares, Original 4.0% Notes	612			612		612			945
Dilutive shares, Original 4.25% Notes	194			194		194			446
Diluted weighted average shares outstanding	79,526			89,324		81,982			86,933
Diluted earnings (loss) per share attributable to MasTec:
Continuing operations	$	0.45		$	0.35	$	0.97		$	1.05
Discontinued operations	(0.12		)	0.01		(0.10		)	0.08
Total diluted earnings per share	$	0.34		$	0.36	$	0.87		$	1.13

There were no weighted average anti-dilutive common stock equivalents from restricted share awards for the three or nine months ended September 30, 2012, respectively. A total of 7,609 and 2,564 weighted average anti-dilutive common stock equivalents were not included in the Company’s diluted earnings per share calculations for the three and nine months ended September 30, 2011, respectively.

Treasury Stock and Share Activity

During the fourth quarter of 2011, the Company’s Board of Directors authorized a $150 million share repurchase plan, 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 second quarter of 2012, the Company repurchased an additional 2.9 million shares under this plan for an aggregate purchase price of $43.8 million. In July 2012, the Company repurchased an additional 2.0 million shares for an aggregate purchase price of $31.2 million, which completed the share repurchase plan. The repurchased shares are held in the Company’s treasury.

A summary of share activity for the nine months ended September 30, 2012 is as follows (in thousands):



	Common Shares Outstanding		Treasury Shares
Balance as of December 31, 2011	80,569		4,594
Shares issued for stock options	68
Shares issued for restricted stock	143
Other shares issued	61
Common stock repurchases	(4,873	)	4,873
Balance as of September 30, 2012	75,968		9,467

Senior Convertible Notes – Diluted Share Impact

The Company had convertible notes outstanding during each of the three and nine months ended September 30, 2012 and 2011. 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 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 for 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 resulting amount, in shares, of the premium over the principal amount is included in the Company’s 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 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. Premium shares associated with the New Notes are reflected in the calculation of diluted earnings per share to the extent that the Company’s average stock price for the corresponding periods exceeded the respective conversion prices of the New Notes, beginning with the date of issuance, or the beginning of the period, as applicable.

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):



	Three and Nine Months Ended September 30,
	2012		2011
Dilutive:
New 4.0% Notes (1)	$	105.3	$	105.3
New 4.25% Notes (1)	97.0		97.0
Original 4.0% Notes (2)	9.7		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 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 three and nine month periods ended September 30, 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 Three Months Ended September 30, 2012				As of and for the Nine Months Ended September 30, 2012
	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	$	17.89	$	17.89	$	17.40	$	17.40
Excess over principal amount	$	14,208	$	15,106	$	10,975	$	12,073
Weighted average equivalent premium shares (in thousands)	794		845		631		694