Earnings Per Common Share

9 Months Ended

Sep. 30, 2011

Earnings Per Common Share

Earnings Per Common Share

(16) Earnings Per Common Share

The following table illustrates the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Numerator - Basic
Income from continuing operations	$	175,471		$	21,428		$	483,707		$	192,162
Noncontrolling interests’ share in continuing operations	(3,276		)	(3,518		)	(12,660		)	(10,077		)
Income from continuing operations applicable to HCP, Inc.	172,195			17,910			471,047			182,085
Preferred stock dividends	(5,282		)	(5,282		)	(15,848		)	(15,848		)
Participating securities’ share in continuing operations	(546		)	(378		)	(1,893		)	(1,648		)
Income from continuing operations applicable to common shares	166,367			12,250			453,306			164,589
Discontinued operations	—			4,745			—			6,707
Net income applicable to common shares	$	166,367		$	16,995		$	453,306		$	171,296
Denominator
Basic weighted-average common shares	407,081			309,448			395,258			299,243
Dilutive potential common shares	1,565			1,644			1,755			1,225
Diluted weighted-average common shares	408,646			311,092			397,013			300,468
Basic earnings per common share
Income from continuing operations	$	0.41		$	0.04		$	1.15		$	0.55
Discontinued operations	—			0.01			—			0.02
Net income applicable to common stockholders	$	0.41		$	0.05		$	1.15		$	0.57
Diluted earnings per common share
Income from continuing operations	$	0.41		$	0.04		$	1.14		$	0.55
Discontinued operations	—			0.01			—			0.02
Net income applicable to common shares	$	0.41		$	0.05		$	1.14		$	0.57

Restricted stock and certain of the Company’s performance restricted stock units are considered participating securities which require the use of the two-class method when computing basic and diluted earnings per share. For the three months ended September 30, 2011 and 2010, earnings representing nonforfeitable dividends of $0.5 million and $0.4 million, respectively, were allocated to the participating securities. For the nine months ended September 30, 2011 and 2010, earnings representing nonforfeitable dividends of $1.9 million and $1.6 million, respectively, were allocated to the participating securities.

Options to purchase approximately 1.1 million and 0.4 million shares of common stock that had an exercise price in excess of the average market price of the common stock during the three months ended September 30, 2011 and 2010, respectively, were not included in the Company’s earnings per share calculations because they are anti-dilutive. Restricted stock and performance restricted stock units representing 15,000 and 30,000 shares of common stock during the three months ended September 30, 2011 and 2010, respectively, were not included because they are anti-dilutive. Additionally, 5.9 million shares issuable upon conversion of 4.2 million DownREIT units during the three months ended September 30, 2011 were not included since they are anti-dilutive. During the three months ended September 30, 2010, 6.0 million shares issuable upon conversion of 4.3 million DownREIT units were not included since they are anti-dilutive.