Earnings Per Common Share

3 Months Ended

Mar. 31, 2014

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 March 31,
	2014			2013
Numerator
Income from continuing operations	$	233,877		$	231,552
Noncontrolling interests’ share in continuing operations	(3,335		)	(3,199		)
Income from continuing operations applicable to HCP, Inc.	230,542			228,353
Participating securities’ share in continuing operations	(1,064		)	(478		)
Income from continuing operations applicable to common shares	229,478			227,875
Discontinued operations	29,746			2,232
Noncontrolling interests’ share in discontinued operations	(1,177		)	—
Net income applicable to common shares	$	258,047		$	230,107
Denominator
Basic weighted average common shares	457,294			453,651
Dilutive potential common shares	380			962
Diluted weighted average common shares	457,674			454,613
Basic earnings per common share
Income from continuing operations	$	0.50		$	0.50
Discontinued operations	0.06			0.01
Net income applicable to common shares	$	0.56		$	0.51
Diluted earnings per common share
Income from continuing operations	$	0.50		$	0.50
Discontinued operations	0.06			0.01
Net income applicable to common shares	$	0.56		$	0.51

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 1.6 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 March 31, 2014 and 2013, 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 0.9 million and 0.4 million shares of common stock during the three months ended March 31, 2014 and 2013, respectively, were not included because they are anti-dilutive. Additionally, 6 million shares issuable upon conversion of 4 million DownREIT units during the three months ended March 31, 2014 were not included because they are anti-dilutive. During the three months ended March 31, 2013, 6 million shares issuable upon conversion of 4 million DownREIT units were not included because they are anti-dilutive.