NOTE 17—LOSS PER SHARE

We compute loss per share using the two-class method, as unvested restricted common stock contains nonforfeitable rights to dividends and meets the criteria of a participating security. Under the two-class method, earnings are allocated between common stock and participating securities. The presentation of basic and diluted earnings per share is required only for each class of common stock and not for participating securities. As such, we present basic and diluted earnings per share for our one class of common stock.

The two-class method includes an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and undistributed earnings for the period. A company’s reported net earnings is reduced by the amount allocated to participating securities to arrive at the earnings allocated to common stockholders for purposes of calculating earnings per share.

Basic earnings per share is computed by dividing net earnings attributable to Real Industry, Inc. by the weighted average number of common shares outstanding for the reporting period. In connection with the Rights Offering, we distributed subscription rights to all of our existing stockholders as of January 28, 2015, and the subscription rights price represented a discount to the market value of our common stock upon the closing of the Rights Offering on February 27, 2015, with respect to the common stockholders. The discount in the Rights Offering with respect to common stockholders represented an implied stock dividend, for which the weighted average shares outstanding have been retroactively adjusted. The computation of weighted average shares outstanding for the year ended December 31, 2015 includes an 8.3% adjustment related to the discount in the Rights Offering. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For the calculation of diluted earnings per share, the basic weighted average number of common shares outstanding is increased by the dilutive effect of unvested restricted common stock awards, common stock options, unvested RSU awards and the Warrants, determined using the treasury stock method.

The following table sets forth the computation of basic and diluted loss per share for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
(In millions, except share and per share amounts)	2017		2016		2015
Loss from continuing operations	$	(120.8)	$	(103.2)	$	(31.7)
Earnings (loss) from discontinued operations, net of income taxes		—		0.6		24.9
Net loss		(120.8)		(102.6)		(6.8)
Earnings from continuing operations attributable to noncontrolling interest		0.9		0.3		0.1
Net loss attributable to Real Industry, Inc.		(121.7)		(102.9)		(6.9)
Dividends on Redeemable Preferred Stock, in-kind		—		(2.0)		(1.5)
Dividends on Redeemable Preferred Stock, in cash or accrued		(2.4)		—		—
Accretion of fair value adjustment to Redeemable Preferred Stock		(3.6)		(1.0)		(0.8)
Numerator for basic and diluted loss per share—Net loss available to common stockholders	$	(127.7)	$	(105.9)	$	(9.2)
Denominator for basic and diluted loss per share—Weighted average shares outstanding		28,968,363		28,719,098		26,657,832
Basic and diluted loss per share:
Continuing operations	$	(4.41)	$	(3.68)	$	(0.35)
Discontinued operations		—		—		—
Basic and diluted loss per share	$	(4.41)	$	(3.68)	$	(0.35)

Unvested restricted common stock, common stock options, unvested RSUs and the Warrants are antidilutive and excluded from the computation of diluted earnings per share if the assumed proceeds upon exercise or vesting are greater than the cost to reacquire the same number of shares at the average market price during the period. For the years ended December 31, 2017, 2016 and 2015, the impact of all outstanding unvested shares of restricted common stock, common stock options, unvested RSUs and the Warrants are excluded from diluted loss per share as their impact would be antidilutive.

The following table provides details on the average market price of Real Industry common stock and the weighted average number of outstanding shares of unvested restricted common stock, common stock options, unvested RSUs and Warrants that were potentially dilutive for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
	2017		2016		2015
Average market price of Real Industry common stock	$	2.69	$	7.02	$	9.22

Potentially dilutive common stock equivalents:
Unvested restricted common stock		632,992		597,246		259,323
Outstanding common stock options		367,600		748,150		775,650
Unvested restricted stock units		209,654		354,058		260,000
Warrants		1,448,333		1,448,333		1,468,333
Total potentially dilutive common stock equivalents		2,658,579		3,147,787		2,763,306

The following table provides summary information about potentially dilutive common stock equivalents for the years ended December 31, 2017, 2016 and 2015:


	Year Ended December 31,
(In millions, except exercise prices)	2017		2016		2015
Average unamortized share-based compensation expense:
Restricted common stock awards	$	3.1	$	2.5	$	1.3
Restricted stock unit awards		0.8		1.4		1.0
Range of exercise prices on common stock options		$3.00 - $10.00		$3.00 - $10.00		$3.00 - $10.00
Weighted average exercise price of the Warrants	$	5.64	$	5.64	$	5.73

Based on the RI Plan, the stockholders immediately prior to emerging from Bankruptcy Proceedings will be diluted to a 16% or 20% ownership of the emerging entity, with the Plan Sponsor owning a 49% interest, and the holder of the Redeemable Preferred Stock either 35% or 31% interest. Before considering any reverse split of the common stock outstanding immediately prior to emerging from Bankruptcy Proceedings, the reorganization would increase the shares outstanding by approximately 155 million or 118 million shares.