Earnings Per Share

Basic earnings per share is computed by dividing earnings available to MasTec’s common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing earnings by the number of fully diluted shares, which includes the effect of dilutive potential issuances of common shares, as determined using earnings from continuing operations. Potentially dilutive common shares include outstanding stock options and unvested restricted share awards, as calculated under the treasury stock method, as well as shares associated with the Company’s outstanding convertible debt securities.

The following table provides details of the Company’s earnings per share calculations for the periods indicated (in thousands, except per share amounts). The table below may contain summation differences due to rounding.



	For the Three Months Ended March 31,
	2013			2012
Basic
Net income attributable to MasTec:
Net income from continuing operations	$	19,317		$	11,695
Net (loss) income from discontinued operations	(947		)	2,477
Basic net income attributable to MasTec	$	18,370		$	14,172
Weighted average shares outstanding	76,608			80,615
Basic earnings (loss) per share:
Continuing operations	$	0.25		$	0.15
Discontinued operations	(0.01		)	0.03
Total basic earnings per share	$	0.24		$	0.18
Diluted
Net income attributable to MasTec:
Basic net income from continuing operations	$	19,317		$	11,695
Interest expense on Original 4.0% Notes, net of tax	58			58
Interest expense on Original 4.25% Notes, net of tax	19			19
Diluted net income from continuing operations	$	19,394		$	11,772
Net (loss) income from discontinued operations	(947		)	2,477
Diluted net income attributable to MasTec	$	18,447		$	14,249
Shares:
Basic weighted average shares outstanding	76,608			80,615
Dilutive common stock equivalents	785			813
Dilutive premium shares, New 4.0% Notes	3,010			809
Dilutive premium shares, New 4.25% Notes	2,885			858
Dilutive shares, Original 4.0% Notes	612			612
Dilutive shares, Original 4.25% Notes	194			194
Diluted weighted average shares outstanding	84,094			83,901
Diluted earnings (loss) per share:
Continuing operations	$	0.23		$	0.14
Discontinued operations	(0.01		)	0.03
Total diluted earnings per share	$	0.22		$	0.17

There were no weighted average anti-dilutive common stock equivalents from restricted share awards for the three months ended March 31, 2013. For the three month periods ended March 31, 2012, a total of 10,962 weighted average anti-dilutive common stock equivalents from restricted share awards were not included in the Company’s diluted earnings per share calculations.

The Company’s Board of Directors authorized a $150 million share repurchase plan in 2011, under which the Company repurchased 4.6 million shares of common stock for $75.0 million during the year ended December 31, 2011. During the year ended December 31, 2012, the Company repurchased an additional 4.9 million shares under this plan for an aggregate purchase price of $75.0 million, which completed the share repurchase plan. The repurchased shares are held in the Company’s treasury.

Senior Convertible Notes – Diluted Share Impact

The Company has $215 million of outstanding convertible notes, including $105.3 million of new 4.0% senior convertible notes (the “New 4.0% Notes”) and $97.0 million of new 4.25% senior convertible notes (the “New 4.25% Notes” and, together with the New 4.0% Notes, the “New Convertible Notes”). The Company also holds $9.6 million of original 4.0% senior convertible notes and $3.0 million of original 4.25% senior convertible notes, (the “Original 4.0% Notes” and the “Original 4.25% Notes,” respectively and, collectively, the “Original Convertible Notes”). The New Notes have an optional physical (common share), cash or combination settlement feature and contain certain conditional conversion features. Due to the optional cash settlement feature and management’s intent to settle the principal amount thereof plus accrued interest in cash, the conversion shares underlying the outstanding principal amount of the New Convertible Notes, totaling approximately 13.0 million shares, are not required to be included in the Company’s diluted share count. If, however, the Company’s average stock price per share during the corresponding periods exceeds the $15.76 conversion price for the New 4.0% Notes or the $15.48 conversion price for the New 4.25% Notes, the weighted average of the resulting value in excess of the principal amount, converted to shares at the market price, is included in the Company’s weighted average diluted share count (“premium shares”). See Note 10 - Debt of the Company's consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2012.

The number of common shares issuable upon conversion of the Company’s Original Notes is reflected in the calculation of weighted average diluted earnings per share for the corresponding periods by application of the “if-converted” method to the extent their effect on the computation of earnings per share from continuing operations is dilutive. Under the “if-converted” method, net income from continuing operations is adjusted to add back the after-tax amount of interest recognized in the period associated with the convertible notes, and correspondingly, the convertible notes are assumed to have been converted with the resulting common shares added to weighted average shares outstanding.

The following table, which may contain summation differences due to rounding, summarizes the principal amounts of the Company’s outstanding convertible notes for the periods indicated, including their respective classification within the computation of earnings per share for each period (in millions):



	For the Three Months Ended March 31,
	2013		2012
Dilutive:
New 4.0% Notes ⁽¹⁾	$	105.3	$	105.3
New 4.25% Notes ⁽¹⁾	97.0		97.0
Original 4.0% Notes ⁽²⁾	9.6		9.7
Original 4.25% Notes ⁽²⁾	3.0		3.0
Total principal amount, dilutive outstanding convertible notes	$	215.0	$	215.0

(1)Dilutive shares associated with the New Convertible Notes are attributable to the premium over the respective conversion prices.

(2)Dilutive shares associated with the Original Convertible Notes are attributable to the underlying principal amounts.

The Company’s average stock price for the three month periods ended March 31, 2013 and 2012 exceeded the conversion prices of the New Convertible Notes. The number of premium shares included in the Company’s diluted share count varies with fluctuations in the Company’s actual share price for the related periods. Higher share prices result in a greater number of equivalent premium shares. Details of the calculation underlying the number of premium shares included in the Company’s diluted share count for the periods indicated are as follows (in thousands, except per share amounts):



	As of and for the Three Months Ended March 31, 2013				As of and for the Three Months Ended March 31, 2012
	New 4.0% Notes		New 4.25% Notes		New 4.0% Notes		New 4.25% Notes
Principal amount	$	105,322	$	97,000	$	105,322	$	97,000
Conversion price per share	$	15.76	$	15.48	$	15.76	$	15.48
Number of conversion shares, principal amount	6,683		6,268		6,683		6,268
Weighted average actual per share price	$	28.68	$	28.68	$	17.93	$	17.93
Excess over principal amount	$	86,316	$	82,735	$	14,512	$	15,390
Weighted average equivalent premium shares	3,010		2,885		809		858

See Note 14 - Common Stock Activity.