NOTE 11—EARNINGS (LOSS) PER SHARE

The Company computes earnings (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, the Company presents basic and diluted earnings per share for its 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. The 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, the Company distributed subscription rights to all of its existing stockholders as of January 28, 2015, and the subscription rights price represented a discount to the market value of the Company’s 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 represents an implied stock dividend, which requires retroactive adjustment of the weighted average shares outstanding reported in reporting periods prior to February 27, 2015. Adjustments to the weighted average shares outstanding in all reporting periods prior to December 31, 2014 disclosed in this Report reflect an 8.3% increase from previously reported weighted average shares outstanding, based on the fair value per share immediately preceding the closing of the Rights Offering, with respect to common stockholders, and the fair value of the common stock as of February 27, 2015. 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 performance shares and the Warrants, determined using the treasury stock method.

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2015 and 2014:

(In millions, except share	Three Months Ended September 30,						Nine Months Ended September 30,
and per share amounts)	2015			2014			2015			2014
Earnings (loss) from continuing operations	$	2.0		$	(0.7	)	$	(29.5	)	$	(4.2	)
Earnings (loss) from discontinued operations, net of income taxes		(0.7	)		1.5			26.5			4.6
Net earnings (loss)		1.3			0.8			(3.0	)		0.4
Earnings from continuing operations attributable to noncontrolling interest		0.1			—			0.3			—
Net earnings (loss) attributable to Real Industry, Inc.		1.2			0.8			(3.3	)		0.4
Dividends and accretion on Redeemable Preferred Stock		(0.7	)		—			(1.6	)		—
Numerator for basic and diluted earnings per share—Net earnings (loss) available to common stockholders	$	0.5		$	0.8		$	(4.9	)	$	0.4
Denominator for basic earnings per share— Weighted average shares outstanding		28,556,383			13,162,987			25,993,660			13,151,059
Effect of dilutive securities		1,257,090			—			—			—
Denominator for diluted earnings per share— Weighted average shares outstanding		29,813,473			13,162,987			25,993,660			13,151,059
Basic earnings (loss) per share:
Continuing operations	$	0.04		$	(0.05	)	$	(1.21	)	$	(0.32	)
Discontinued operations		(0.02	)		0.11			1.02			0.35
Basic earnings (loss) per share	$	0.02		$	0.06		$	(0.19	)	$	0.03
Diluted earnings (loss) per share:
Continuing operations	$	0.04		$	(0.05	)	$	(1.21	)	$	(0.32	)
Discontinued operations		(0.02	)		0.11			1.02			0.35
Diluted earnings (loss) per share	$	0.02		$	0.06		$	(0.19	)	$	0.03

Unvested restricted common stock, common stock options, unvested performance shares 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. The dilutive impact of these securities is reflected in the weighted average diluted shares outstanding for the three months ended September 30, 2015. For the nine months ended September 30, 2015 and 2014, and the three months ended September 30, 2014, the impact of all outstanding unvested shares of restricted common stock, common stock options, unvested performance shares and the Warrants are excluded from diluted earnings (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 performance shares and Warrants that were potentially dilutive for each of the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Average market price of Real Industry common stock	$	10.63	$	8.77	$	9.18	$	9.93
Potentially dilutive common stock equivalents:
Unvested restricted common stock		—		109,319		224,526		105,381
Common stock options		—		1,205,743		850,707		1,213,671
Unvested performance shares		—		—		116,190		—
Warrants		—		1,500,000		1,491,874		1,500,000
Total potentially dilutive common stock equivalents		—		2,815,062		2,683,297		2,819,052