EARNINGS PER COMMON SHARE

9 Months Ended

Sep. 30, 2015

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under the Company’s employee stock purchase plan, RSUs, and the assumed conversion of mandatory convertible preferred stock. The effect of potentially dilutive securities is reflected in diluted earnings per share by application of the "treasury stock method" for outstanding restricted stock awards and stock options. Under the treasury stock method, an increase in the fair market value of the Company’s common stock can result in a greater dilutive effect from potentially dilutive securities. For the issue of the mandatory convertible preferred stock, we use the more dilutive of the "dividend method" or the "if-converted method". Under the dividend method, the net income is reduced by the amount of the accrued dividend related to mandatory convertible preferred stock. Under the if-converted method, the dividend is ignored in favor of the diluted share count that would occur under the assumption that the mandatory convertible preferred shares were converted to common shares at the closing share price on the date of issuance.

The following table sets forth the computation of basic and diluted earnings per share:



In thousands, except share and per share data
	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Numerator:
Net income attributable to Stericycle, Inc.	$	52,263		$	82,845	$	188,170		$	243,930
Mandatory convertible preferred stock dividend (1)	(1,684		)	—		(1,684		)	—
Numerator for basic earnings per share attributable to Stericycle, Inc. common shareholders	$	50,579		$	82,845	$	186,486		$	243,930
Denominator:
Denominator for basic earnings per share-weighted average shares	84,884,599			84,858,360		84,960,955			84,940,975
Effect of diluted securities:
Employee stock options	1,235,716			1,258,095		1,273,904			1,296,227
Mandatory convertible preferred stock (2)	—			—		—			—
Denominator for diluted earnings per share-adjusted weighted average shares and after assumed exercises	86,120,315			86,116,455		86,234,859			86,237,202
Earnings per share – Basic	$	0.60		$	0.98	$	2.19		$	2.87
Earnings per share – Diluted	$	0.59		$	0.96	$	2.16		$	2.83


(1)	Mandatory convertible preferred stock dividend - no dividend was declared or paid as of September 30, 2015.


(2)	Weighted average common shares issuable upon the assumed conversion of the mandatory convertible preferred stock totaling 921,207 shares were excluded from the computation of diluted earnings per share as such conversion would have been antidilutive.

For additional information regarding outstanding employee stock options, see Note 6 - Stock Based Compensation.