Net Income Per Share

6 Months Ended

Jun. 30, 2015

NET INCOME PER SHARE

Pursuant to the Second Modified Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc. (the "Reorganization Plan"), 45,000,000 shares of new common stock at par value of $0.01 per share and 5,047,138 warrants were issued. Warrants entitle such holders to acquire up to 5,047,138 shares of new common stock at an exercise price of $16.67 per share at any time on or prior to April 30, 2023. For the six months ended June 30, 2015 and 2014, 398 and 51 warrants were exercised, respectively, resulting in an issuance of 207 and 51 shares of common stock, respectively. As of June 30, 2015, Ambac had 5,039,479 warrants outstanding.

Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding and vested restricted stock units. Diluted net income per share is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares used for basic earnings per share plus all potential dilutive common shares outstanding during the period. All potential dilutive common shares outstanding consider common stock deliverable pursuant to warrants issued under the Reorganization Plan and vested and unvested options, unvested restricted stock units and performance stock units granted under employee and director compensation plans.

The following table provides a reconciliation of the common shares used for basic net income per share to the diluted shares used for diluted net income per share:



	Three Months Ended June 30,		Six Months Ended June 30,
	2015	2014	2015	2014
Basic weighted average shares outstanding	45,190,089	45,091,983	45,173,239	45,067,539
Effect of potential dilutive shares:
Warrants	1,480,990	—	1,625,901	—
Stock options	8,409	—	10,625	—
Restricted stock units	18,242	—	21,628	—
Performance stock units	5,042	—	4,094	—
Diluted weighted average shares outstanding	46,702,772	45,091,983	46,835,487	45,067,539

Stock options to purchase 110,000 shares of common stock were outstanding but not included in the computation of diluted earnings per share because they were antidilutive under the treasury stock method for the three and six months ended June 30, 2015.