Earnings Per Common Share

9 Months Ended

Sep. 30, 2013

Earnings Per Common Share

Earnings Per Common Share

(14) Earnings Per Common Share

The following table illustrates the computation of basic and diluted earnings per share (in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
Numerator
Income from continuing operations	$	223,462		$	192,363		$	662,308		$	581,106
Noncontrolling interests’ share in continuing operations	(3,102		)	(2,935		)	(9,625		)	(9,070		)
Income from continuing operations applicable to HCP, Inc.	220,360			189,428			652,683			572,036
Preferred stock dividends	—			—			—			(17,006		)
Participating securities’ share in continuing operations	(474		)	(479		)	(1,330		)	(2,154		)
Income from continuing operations applicable to common shares	219,886			188,949			651,353			552,876
Discontinued operations	13,396			6,680			25,059			19,476
Net income applicable to common shares	$	233,282		$	195,629		$	676,412		$	572,352
Denominator
Basic weighted average common shares	455,345			429,557			454,553			420,049
Dilutive potential common shares	733			1,221			835			1,355
Diluted weighted average common shares	456,078			430,778			455,388			421,404
Basic earnings per common share
Income from continuing operations	$	0.48		$	0.44		$	1.43		$	1.32
Discontinued operations	0.03			0.02			0.06			0.04
Net income applicable to common shares	$	0.51		$	0.46		$	1.49		$	1.36
Diluted earnings per common share
Income from continuing operations	$	0.48		$	0.44		$	1.43		$	1.32
Discontinued operations	0.03			0.01			0.06			0.04
Net income applicable to common shares	$	0.51		$	0.45		$	1.49		$	1.36

Restricted stock and certain of the Company’s performance restricted stock units are considered participating securities, because dividend payments are not forfeited even if the underlying award does not vest, which require the use of the two-class method when computing basic and diluted earnings per share.

Options to purchase approximately 0.9 million and 0.5 million shares of common stock that had an exercise price (including deferred compensation expense) in excess of the average closing market price of the Company’s common stock during the three months ended September 30, 2013 and 2012, respectively, were not included in the Company’s earnings per share calculations because they are anti-dilutive. Restricted stock and performance restricted stock units representing 7,500 shares of common stock during the three months ended September 30, 2013 were not included because they are anti-dilutive. Additionally, 6.0 million shares issuable upon conversion of 3.9 million DownREIT units during the three months ended September 30, 2013 were not included because they are anti-dilutive. During the three months ended September 30, 2012, 6.4 million shares issuable upon conversion of 4.4 million DownREIT units were not included because they are anti-dilutive.