Earnings Per Share

The Company’s restricted stock is considered a participating security pursuant to the two-class method for computing basic earnings per share (“EPS”). The Class A Common Units, which are reflected as noncontrolling interests in the Consolidated Balance Sheets, are considered convertible participating securities as they are entitled to participate in any dividends paid to the Company’s common shareholders. The Class A Common Units are included in the computation of basic EPS using the two-class method and are included in the computation of diluted EPS using the if-converted method. The Class A common stock issuable in connection with a put or conversion of the 2014 Senior Notes, 2016 Senior Notes, 2018 Senior Notes, 2020 Senior Notes and Series A preferred stock is included in the computation of diluted EPS using the if-converted method. The loss from continuing operations attributable to Forest City Enterprises, Inc. for the three and nine months ended October 31, 2012 was allocated solely to holders of common stock as the participating security holders do not share in the losses.

The reconciliation of the basic and diluted EPS computations is shown in the following table:



	Three Months Ended October 31,						Nine Months Ended October 31,
	2013			2012			2013			2012
Numerators (in thousands)
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc.	$	152,789		$	(13,927	)	$	95,141		$	(40,124	)
Preferred dividends and inducements of preferred stock conversion	—			(17,731		)	(185		)	(25,431		)
Undistributed earnings allocated to participating securities	(4,363		)	—			(2,783		)	—
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders ‑ Basic	$	148,426		$	(31,658	)	$	92,173		$	(65,555	)
Undistributed earnings allocated to participating securities	4,363			—			2,783			—
Interest on convertible debt	4,323			—			11,137			—
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders ‑ Diluted	$	157,112		$	(31,658	)	$	106,093		$	(65,555	)
Net earnings (loss) attributable to Forest City Enterprises, Inc.	$	153,329		$	(1,078	)	$	117,680		$	(22,043	)
Preferred dividends and inducements of preferred stock conversion	—			(17,731		)	(185		)	(25,431		)
Undistributed earnings allocated to participating securities	(4,378		)	—			(3,444		)	—
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders ‑ Basic	$	148,951		$	(18,809	)	$	114,051		$	(47,474	)
Undistributed earnings allocated to participating securities	4,378			—			3,444			—
Interest on convertible debt	4,323			—			11,137			—
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders ‑ Diluted	$	157,652		$	(18,809	)	$	128,632		$	(47,474	)
Denominators
Weighted average shares outstanding ‑ Basic	197,721,350			170,777,898			192,512,992			169,817,482
Effect of stock options, restricted stock and performance shares	1,936,522			—			1,460,461			—
Effect of convertible debt	32,138,215			—			29,659,197			—
Effect of convertible Class A Common Units	3,646,755			—			3,646,755			—
Weighted average shares outstanding ‑ Diluted ⁽¹⁾	235,442,842			170,777,898			227,279,405			169,817,482
Earnings Per Share
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders ‑ Basic	$	0.75		$	(0.19	)	$	0.48		$	(0.39	)
Earnings (loss) from continuing operations attributable to Forest City Enterprises, Inc. common shareholders ‑ Diluted	$	0.67		$	(0.19	)	$	0.47		$	(0.39	)
Net earning (loss) attributable to Forest City Enterprises, Inc. common shareholders ‑ Basic	$	0.75		$	(0.11	)	$	0.59		$	(0.28	)
Net earnings (loss) attributable to Forest City Enterprises, Inc. common shareholders ‑ Diluted	$	0.67		$	(0.11	)	$	0.57		$	(0.28	)

(1)

Incremental shares from dilutive options, restricted stock, performance shares and convertible securities aggregating 51,666,897 and 52,245,656 for the three and nine months ended October 31, 2012 were not included in the computation of diluted EPS because their effect is anti-dilutive due to the loss from continuing operations. Weighted-average shares issuable upon the conversion of preferred stock of 108,334 for the nine months ended October 31, 2013 were not included in the computation of diluted EPS because their effect is anti-dilutive under the if-converted method. Weighted-average options, restricted stock and performance shares of 3,181,351 and 3,695,539 for the three and nine months ended October 31, 2013, respectively, and 3,751,604 and 4,237,027 for the three and nine months ended October 31, 2012, respectively, were not included in the computation of diluted EPS because their effect is anti-dilutive under the treasury stock method.