Earnings Per Common Share

6 Months Ended

Jun. 30, 2013

Earnings Per Common Share

Earnings Per Common Share

(14) Earnings Per Common Share

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Numerator
Income from continuing operations	$	215,166		$	204,900		$	448,388		$	398,358
Noncontrolling interests’ share in continuing operations	(3,324		)	(2,951		)	(6,523		)	(6,135		)
Income from continuing operations applicable to HCP, Inc.	211,842			201,949			441,865			392,223
Preferred stock dividends	—			—			—			(17,006		)
Participating securities’ share in continuing operations	(378		)	(557		)	(856		)	(1,674		)
Income from continuing operations applicable to common shares	211,464			201,392			441,009			373,543
Discontinued operations	1,559			75			2,121			3,181
Net income applicable to common shares	$	213,023		$	201,467		$	443,130		$	376,724
Denominator
Basic weighted average common shares	454,618			420,468			454,137			415,243
Dilutive potential common shares	813			1,203			887			1,423
Diluted weighted average common shares	455,431			421,671			455,024			416,666
Basic earnings per common share
Income from continuing operations	$	0.47		$	0.48		$	0.97		$	0.90
Discontinued operations	—			—			0.01			0.01
Net income applicable to common shares	$	0.47		$	0.48		$	0.98		$	0.91
Diluted earnings per common share
Income from continuing operations	$	0.47		$	0.48		$	0.97		$	0.90
Discontinued operations	—			—			—			—
Net income applicable to common shares	$	0.47		$	0.48		$	0.97		$	0.90

Restricted stock and certain of the Company’s performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, which require the use of the two-class method when computing basic and diluted earnings per share.

Options to purchase approximately 0.5 million and 1.0 million shares of common stock that had an exercise price (including deferred compensation expense) in excess of the average closing market price of the Company’s common stock during the three months ended June 30, 2013 and 2012, 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 2,900 and 21,000 shares of common stock during the three months ended June 30, 2013 and 2012, respectively, were not included because they are anti-dilutive. Additionally, 6.0 million shares issuable upon conversion of 3.9 million DownREIT units during the three months ended June 30, 2013 were not included because they are anti-dilutive. During the three months ended June 30, 2012, 5.8 million shares issuable upon conversion of 4.1 million DownREIT units were not included because they are anti-dilutive.