Note 7—Earnings Per Share

We apply the two-class method when computing earnings per share, which requires that net income per share for each class of shares entitled to dividends be calculated assuming all of our net income is distributed as dividends to these shareholders based on their contractual rights.

The following table presents the calculation of basic and diluted earnings per share of common stock outstanding:


	Year Ended June 30,
	2014						2013				2012
	Basic			Diluted			Basic		Diluted		Basic		Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income	$	234,579		$	234,579		$	142,407	$	142,407	$	329,541	$	329,541
Net loss attributable to noncontrolling interest		(113	)		(113	)		0		0		0		0

Net income attributable to Harman International Industries, Incorporated	$	234,692		$	234,692		$	142,407	$	142,407	$	329,541	$	329,541

Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding		69,073			69,073			68,990		68,990		71,297		71,297
Employee stock options		0			816			0		746		0		786

Total weighted average shares outstanding		69,073			69,889			68,990		69,736		71,297		72,083

Earnings per Share:
Earnings per share	$	3.40		$	3.36		$	2.06	$	2.04	$	4.62	$	4.57

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities, as defined under GAAP, and are included in the computation of earnings per share pursuant to the two-class method.

Certain options were outstanding and not included in the computation of diluted net earnings per share because the assumed exercise of these options would have been antidilutive. Options to purchase 314,635, 1,258,680 and 1,685,144 shares of our common stock for the fiscal year ended June 30, 2014, 2013 and 2012, respectively, were outstanding and not included in the computation of diluted earnings per share because the exercise of these options would have been antidilutive. In addition, 0, 0 and 3,000 restricted shares and restricted stock units for the fiscal year ended June 30, 2014, 2013 and 2012 were outstanding, respectively, and were excluded from the computation of diluted earnings per share as they also would have been antidilutive.

In October 2012, we repaid the Convertible Senior Notes, and therefore the Convertible Senior Notes had no impact on our calculation of earnings per share for the fiscal years ended June 30, 2014 and 2013. For the fiscal year ended June 30, 2012, the conversion terms of the Convertible Senior Notes would have affected the calculation of diluted earnings per share if the price of our common stock exceeded the conversion price of the Convertible Senior Notes. The initial conversion price of the Convertible Senior Notes was approximately $104 per share, subject to adjustment in specified circumstances as described in the indenture governing the Convertible Senior Notes, as amended (the “Indenture”). Upon conversion, a holder of the Convertible Senior Notes would have received an amount in cash per $1,000 principal amount of Convertible Senior Notes equal to the lesser of $1,000 or the conversion value of the Convertible Senior Notes, determined in the manner set forth in the Indenture. If the conversion value exceeded $1,000, we would have delivered $1,000 in cash and, at our option, cash or common stock or a combination of cash and common stock for the conversion price in excess of $1,000. The conversion option would not have resulted in an adjustment to net income in calculating diluted earnings per share. The dilutive effect of the conversion option was calculated using the treasury stock method. Therefore, conversion settlement shares would have been included in diluted shares outstanding if the price of our common stock exceeded the conversion price of the Convertible Senior Notes. Refer to Note 9—Debt for more information. .