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Earnings Per Share
 3 Months Ended
Mar. 31, 2012
Earnings Per Share

Note 13 – Earnings Per Share

In June 2008, the FASB issued authoritative guidance under ASC 260, “Earnings Per Share.” The guidance under ASC 260 holds that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are “participating securities” as defined in ASC 260, and therefore should be included in computing earnings per share (EPS) using the two-class method.

The two-class method is an earnings allocation method for computing EPS when an entity’s capital structure includes two or more classes of common stock or common stock and participating securities. It determines EPS based on dividends declared on common stock and participating securities and participation rights of participating securities in any undistributed earnings.

 

The following table illustrates basic and diluted EPS under the guidance of ASC 260 for the three months ended March 31, 2012 and 2011:

 

    Three months ended     Three months ended  
    March 31, 2012     March 31, 2011  
    Common     Participating     Common     Participating  
(in thousands, except per share data)   Stock     Securities     Stock     Securities  

Basic EPS:

        

Net income

   $ 56,395          48,790     

Less income allocated to nonvested awards

     (196 )      196        (191 )      191   
 

 

 

    

 

 

    

 

 

    

 

 

  

Net income allocated to common stock for EPS calculation (a)

   $ 56,199        196        48,599        191   
 

 

 

    

 

 

    

 

 

    

 

 

  

Average common shares outstanding (b)

     188,052        667        192,851        765   
 

 

 

    

 

 

    

 

 

    

 

 

  

Basic EPS (a)/(b)

   $ 0.30        0.29        0.25        0.25   
 

 

 

    

 

 

    

 

 

    

 

 

  

Diluted EPS:

        

Net income

   $ 56,395          48,790     

Less income allocated to nonvested awards

     (196 )      196        (191 )      191   
 

 

 

    

 

 

    

 

 

    

 

 

  

Net income allocated to common stock for EPS calculation (c)

   $ 56,199        196        48,599        191   
 

 

 

    

 

 

    

 

 

    

 

 

  

Average common shares outstanding

     188,052        667        192,851        765   

Increase due to assumed issuance of shares related to common equivalent shares outstanding

     1,010          305     
 

 

 

    

 

 

    

 

 

    

 

 

  

Average common and common equivalent shares outstanding (d)

     189,062        667        193,156        765   
 

 

 

    

 

 

    

 

 

    

 

 

  

Diluted EPS (c)/(d)

   $ 0.30        0.29        0.25        0.25   
 

 

 

    

 

 

    

 

 

    

 

 

  

The diluted EPS calculation excludes stock options and nonvested awards that are convertible into 3.2 million common shares for the three months ended March 31, 2012, and excludes 8.7 million common shares for the three months ended March 31, 2011 because their inclusion would have been anti-dilutive.