Note 2 - 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 reflects the potential dilution that could occur if stock options and unvested restricted stock ("common stock equivalents"), convertible securities, or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of MasTec. Common stock equivalents are measured under the treasury stock method.

As described in Note 9 – Debt, the Company had convertible notes outstanding during both the three and six months ended June 30, 2011 and 2010. During the first quarter of 2011, the Company exchanged $105.3 million of its original 4.0% senior convertible notes and $97 million of its original 4.25% senior convertible notes for identical principal amounts of new 4.0% and 4.25% senior convertible notes (the "New 4.0% Notes" and the "New 4.25% Notes," respectively and, collectively, the "New Notes"). The terms of the New Notes are substantially identical to the original notes, except that the New Notes have an optional physical, 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 in cash, the conversion shares underlying the principal amount of the New Notes are not required to be included in the Company's diluted share count. If, however, the Company's average stock price per share 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 resulting amount, in shares, of the premium over the principal amount is included in the Company's diluted share count ("premium shares").

The Company's original senior convertible notes are reflected in the calculation of diluted earnings per share for the corresponding periods by application of the "if-converted" method to the extent their effect is dilutive. Under the "if-converted" method, in computing the dilutive effect of the Company's convertible notes, net income 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. Premium shares associated with the New Notes are reflected in the calculation of diluted earnings per share to the extent that the Company's average stock price for the corresponding periods exceeds the respective conversion prices of the New Notes, beginning with the date of issuance, or the beginning of the period, as applicable.

The following table summarizes the principal amounts of the Company's outstanding convertible notes for the three and six months ended June 30, 2011 and 2010, including their respective classification within the computation of earnings per share for each period (in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Dilutive:
New 4.0% senior convertible notes (1)	$	105.3	$	—	$	105.3	$	—
New 4.25% senior convertible notes (1)		97.0		—		97.0		—
Original 4.0% senior convertible notes (2)		9.7		115.0		9.7		115.0
Original 4.25% senior convertible notes (2)		3.0		100.0		3.0		100.0

Total principal value, outstanding convertible notes	$	215.0	$	215.0	$	215.0	$	215.0

(1)

Diluted shares associated with the New Notes are attributable to the premium feature.

(2)

Diluted shares associated with the original senior convertible notes are attributable to the underlying principal amounts.

The Company's average stock price for the three and six months ended June 30, 2011 exceeded the conversion prices of the New 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 period. Higher actual share prices result in a greater number of equivalent premium shares. Premium shares included in the Company's diluted share count as of June 30, 2011 were as follows:


	Three Months Ended June 30, 2011				Six Months Ended June 30, 2011
	New 4.0% Senior Convertible Notes		New 4.25% Senior Convertible Notes		New 4.0% Senior Convertible Notes		New 4.25% Senior Convertible Notes
Conversion price	$	15.76	$	15.48	$	15.76	$	15.48
Weighted average share price	$	20.29	$	20.29	$	19.05	$	18.99
Weighted equivalent premium shares (in thousands)		1,491		1,486		1,062		1,090

The following table provides details of the Company's earnings per share calculations for the periods indicated (in thousands, except per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Basic:
Net income attributable to MasTec	$	44,494	$	14,601	$	65,599	$	22,011
Weighted average shares outstanding		82,753		76,073		80,575		76,046


Basic earnings per share attributable to MasTec	$	0.54	$	0.19	$	0.81	$	0.29


Diluted:
Net income:
Basic net income attributable to MasTec	$	44,494	$	14,601	$	65,599	$	22,011
Interest expense on original 4.0% senior convertible notes, net of tax		59		677		213		1,360
Interest expense on original 4.25% senior convertible notes, net of tax		19		625		114		1,257


Diluted net income attributable to MasTec	$	44,572	$	15,903	$	65,926	$	24,628


Shares:
Basic weighted average shares outstanding		82,753		76,073		80,575		76,046
Dilutive common stock equivalents		1,098		809		1,284		846
Dilutive premium shares, new 4.0% senior convertible notes		1,491		—		1,062		—
Dilutive premium shares, new 4.25% senior convertible notes		1,486		—		1,090		—
Dilutive shares, original 4.0% senior convertible notes		612		7,297		1,115		7,297
Dilutive shares, original 4.25% senior convertible notes		194		6,462		575		6,462


Diluted weighted average shares outstanding		87,634		90,641		85,701		90,651


Diluted earnings per share attributable to MasTec	$	0.51	$	0.18	$	0.77	$	0.27