Earnings Per Share

3 Months Ended

Mar. 31, 2012

Earnings Per Share

Earnings Per Share

2.  Earnings Per Share

Basic earnings per share attributable to PHH Corporation was computed by dividing Net income attributable to PHH Corporation for the period by the weighted-average number of shares outstanding during the period. Diluted earnings per share attributable to PHH Corporation was computed by dividing Net income attributable to PHH Corporation for the period by the weighted-average number of shares outstanding during the period, assuming all potentially dilutive common shares were issued.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method excludes the effect of any contingently issuable securities where the contingency has not been met as well as the effect of securities that would be anti-dilutive, which may include: (i) outstanding stock-based compensation awards representing shares from restricted stock units and stock options; (ii) stock assumed to be issued related to convertible notes; (iii) purchased options and sold warrants related to the assumed conversion of the 2012 Convertible notes; and (iv) sold warrants related to the Company’s 2014 Convertible notes.  The computation also excludes the assumed issuance of the 2014 Convertible notes and related purchased options as they are currently to be settled only in cash. Shares associated with anti-dilutive securities are outlined in the table below.

The following table summarizes the calculations of basic and diluted earnings per share attributable to PHH Corporation for the periods indicated:

	Three Months Ended
	March 31,
	2012		2011
	(In millions, except share
	and per share data)
Net income attributable to PHH Corporation	$	75	$	49
Weighted-average common shares outstanding — basic	56,657,040		56,108,525
Effect of potentially dilutive securities:
Share-based payment arrangements(1)	224,084		934,730
Conversion of debt securities(2)	841,111		1,583,917
Weighted-average common shares outstanding — diluted	57,722,235		58,627,172
Basic earnings per share attributable to PHH Corporation	$	1.32	$	0.87
Diluted earnings per share attributable to PHH Corporation	$	1.30	$	0.84
Anti-dilutive securities excluded from the computation of dilutive securities:
Outstanding stock-based compensation awards	1,576,342		314,358

(1)    Represents incremental shares from restricted stock units and stock options.

(2)    Represents assumed conversion of the 2017 Convertible notes and the 2012 Convertible notes for the three months ended March 31, 2012 and 2011, respectively.