Net Income Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Net Income Per Share

5. NET INCOME PER SHARE

As of September 30, 2020, 45,809,139 shares of Ambac's common stock (par value $0.01) and warrants entitling holders to acquire up to 4,877,749 shares of new common stock at an exercise price of $16.67 per share were issued and outstanding. Common shares outstanding increased by 253,739 during the nine

months ended September 30, 2020, primarily due to settlements of employee restricted and performance stock units.

Basic net income per share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding and vested restricted stock units (together, "Basic Weighted Average Shares Outstanding").

Diluted net income per share is computed by dividing net income attributable to common stockholders by the Basic Weighted Average Shares Outstanding plus all potential dilutive common shares outstanding during the period. All potential dilutive common shares outstanding consider common stock deliverable

pursuant to warrants, vested and unvested options, unvested restricted stock units and performance stock units granted under existing 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 September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Basic weighted average shares outstanding	46,178,730	45,997,694	46,135,399	45,939,284
Effect of potential dilutive shares (1):
Stock options	—	—	—	—
Warrants	—	450,384	—	—
Restricted stock units	—	78,751	—	—
Performance stock units (2)	—	493,229	—	—
Diluted weighted average shares outstanding	46,178,730	47,020,058	46,135,399	45,939,284
Anti-dilutive shares excluded from the above reconciliation:
Stock options	16,667	16,667	16,667	16,667
Warrants	4,877,749	—	4,877,754	4,877,783
Restricted stock units	333,526	—	286,279	249,025
Performance stock units (2)	972,138	—	932,777	748,700

(1)    For the three and nine months ended September 30, 2020, and the nine months ended September 30, 2019, Ambac had a net loss and accordingly excluded all potentially dilutive securities from the determination of diluted loss per share as their impact was anti-dilutive.

(2)    Performance stock units are reflected based on the performance metrics through the balance sheet date. Vesting of these units is contingent upon meeting certain performance metrics. Although a portion of these performance metrics have been achieved as of the respective period end, it is possible that awards may no longer meet the metric at the end of the performance period.