NOTE 16—EARNINGS (LOSS) PER SHARE

We compute 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, 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. Adjustments to the weighted average shares outstanding in all reporting periods prior to January 1, 2015 disclosed in this Annual Report reflect an 8.3% increase from originally 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. 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 earnings (loss) per share for the years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31,
(In millions, except share and per share amounts)	2016			2015			2014
Loss from continuing operations	$	(103.2	)	$	(31.7	)	$	(0.1	)
Earnings from discontinued operations, net of income taxes		0.6			24.9			5.5
Net earnings (loss)		(102.6	)		(6.8	)		5.4
Earnings (loss) from continuing operations attributable to noncontrolling interest		0.3			0.1			(0.1	)
Net earnings (loss) attributable to Real Industry, Inc.		(102.9	)		(6.9	)		5.5
Dividends on Redeemable Preferred Stock, in-kind		(2.0	)		(1.5	)		—
Accretion of fair value adjustment to Redeemable Preferred Stock		(1.0	)		(0.8	)		—
Numerator for basic and diluted earnings (loss) per share— Net earnings (loss) available to common stockholders	$	(105.9	)	$	(9.2	)	$	5.5
Denominator for basic and diluted earnings (loss) per share— Weighted average shares outstanding		28,719,098			26,657,832			13,403,083
Basic and diluted earnings (loss) per share:
Continuing operations	$	(3.68	)	$	(0.35	)	$	—
Discontinued operations		—			—			0.41
Basic and diluted earnings (loss) per share	$	(3.68	)	$	(0.35	)	$	0.41

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, 2016, 2015 and 2014, the impact of all outstanding unvested shares of restricted common stock, common stock options, unvested RSUs 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 RSUs and Warrants that were potentially dilutive for the years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31,
	2016		2015		2014
Average market price of Real Industry common stock	$	7.02	$	9.22	$	9.58

Potentially dilutive common stock equivalents:
Unvested restricted common stock		597,246		259,323		114,505
Outstanding common stock options		748,150		775,650		1,067,700
Unvested restricted stock units		354,058		260,000		—
Warrants		1,448,333		1,468,333		1,500,000
Total potentially dilutive common stock equivalents		3,147,787		2,763,306		2,682,205

The following table provides summary information about potentially dilutive common stock equivalents for the years ended December 31, 2016, 2015 and 2014:

	Year Ended December 31,
(In millions, except exercise prices)	2016		2015		2014
Average unamortized share-based compensation expense:
Restricted common stock awards	$	2.5	$	1.3	$	0.6
Common stock option awards		—		—		0.1
Restricted stock unit awards		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	$	5.73	$	6.66