Net Income Per Share

9 Months Ended

Sep. 30, 2015

5. NET INCOME PER SHARE

Pursuant to the Second Modified Fifth Amended Plan of Reorganization of Ambac (the "Reorganization Plan"), 45,000,000 shares of new common stock at par value of $0.01 per share and 5,047,138 warrants were issued. Warrants entitle such holders to acquire up to 5,047,138 shares of new common stock at an exercise price of $16.67 per share at any time on or prior to April 30, 2023. For the nine months ended September 30, 2015 and 2014, 740 and 949 warrants were exercised, respectively, resulting in an issuance of 236 and 949 shares of common stock, respectively.

On June 30, 2015, the Board of Directors of Ambac authorized the establishment of a warrant repurchase program that permits the repurchase of up to $10,000 of warrants. As of September 30, 2015, Ambac had repurchased 577,500 warrants totaling $5,017, leaving 4,461,637 warrants outstanding with an exercise price of $16.67 per share and expiration of April 30, 2023.

Basic net income per share is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding and vested restricted stock units. Diluted net income per share is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares used for basic earnings per share plus all potential dilutive common shares outstanding during the period. All potential dilutive common shares outstanding consider common stock deliverable pursuant to warrants issued under the Reorganization Plan and vested and unvested options, unvested restricted stock units and performance stock units granted under employee and director compensation plans.

The following table provides a reconciliation of the common shares used for basic net income per share to the diluted shares used for diluted net income per share:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Basic weighted average shares outstanding	45,174,521	45,115,882	45,173,671	45,083,831
Effect of potential dilutive shares:
Warrants	—	1,469,203	1,154,313	1,892,211
Stock options	—	8,220	7,083	10,569
Restricted stock units	—	31,384	14,418	40,473
Performance stock units	—	—	2,729	—
Diluted weighted average shares outstanding	45,174,521	46,624,689	46,352,214	47,027,084

For the three months ended September 30, 2015, Ambac incurred net losses and accordingly excluded all potentially dilutive securities from the determination of diluted loss per share as their impact was antidilutive. Antidilutive securities for the three months ended September 30, 2015 included stock options and warrants to purchase 176,668 and 4,461,637 shares of common stock, respectively, where the exercise price was greater than the average market price, 78,460 restricted stock units and 96,349 performance stock units at their target amounts. Antidilutive securities for the nine months ended September 30, 2015 included stock options to purchase 110,000 shares of common stock where the exercise price was greater than the average market price.