Loss Per Share

We present loss per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). Basic earnings (loss) per share is computed by dividing earnings (loss) attributable to AV Homes common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) 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 or resulted in the issuance of common stock that then shared in the earnings of AV Homes. In accordance with ASC 260, the computation of diluted earnings (loss) per share for the nine and three months ended September 30, 2013 and 2012 did not assume the effect of restricted stock units, employee stock options, the 7.50% Notes, the 7.50% Exchange Notes, or the 4.50% Notes because the effects were antidilutive.

The weighted average number of shares outstanding in calculating basic loss per share includes the cancellation of 2,364 shares and 0 shares of common stock and the issuance of 9,241,978 shares and 6,676,371 shares of common stock for the nine and three months ended September 30, 2013, respectively, and cancellation of 26,412 shares and 21,340 shares of common stock and issuance of 71,160 shares and 64,000 shares of common for the nine and three months ended September 30, 2012, respectively. In accordance with ASC 260, non-vested restricted shares are not included in basic earnings per share until the vesting requirements are met.

In accordance with ASC 470-20, an embedded beneficial conversion feature present in a convertible instrument shall be recognized separately by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in-capital. Intrinsic value shall be calculated at the commitment date (preferred stock issuance) as the difference between the conversion price and the fair value of the common stock into which the security is convertible. The most favorable conversion price shall be used to measure the intrinsic value. The intrinsic value of the contingent beneficial conversion feature was recognized upon resolution of the contingency (shareholder approval of conversion) as a deemed dividend on the convertible preferred stock, and is added to net loss to arrive at loss attributable to common stockholders in the loss per share calculation. The deemed dividend had a ($0.85) and ($.74)per share effect on earnings for the nine and three months ended September 30, 2013, respectively.

The following table represents the net loss and weighted average shares outstanding for the calculation of basic and diluted loss per share for the nine and three months ended September 30, 2013 and 2012:



	Nine Months						Three Months
	2013			2012			2013			2012
Numerator:
Basic and diluted loss per share – net loss	$	(11,301	)	$	(31,379	)	$	(1,877	)	$	(11,583	)
Deemed dividend related to the beneficial conversion feature	$	(11,894	)	$	—		$	(11,894	)	$	—
Income (loss) attributable to common stockholders	$	(23,195	)	$	(31,379	)	$	(13,771	)	$	(11,583	)
Denominator:
Basic and diluted weighted average shares outstanding	13,927,716			12,542,605			16,097,335			12,574,002