Note 4 - Earnings (Loss) Per Common Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Text Block]

4.       Earnings (Loss) Per Common Share

We compute earnings (loss) per share in accordance with ASC Topic 260, Earnings per Share (“ASC 260”), which requires earnings (loss) per share for each class of stock (common stock and participating preferred stock) to be calculated using the two-class method.  The two-class method is an allocation of earnings (loss) between the holders of common stock and a company's participating security holders.  Under the two-class method, earnings (loss) for the reporting period are allocated between common shareholders and other security holders based on their respective participation rights in undistributed earnings.  Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents are participating securities and, therefore, are included in computing earnings per share pursuant to the two-class method.

Basic earnings (loss) per common share is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding.  Our Series B junior participating convertible preferred stock (“Series B Preferred Stock”), which is convertible into shares of our common stock at the holder’s option (subject to a limitation based upon voting interest), and our unvested restricted stock, are classified as participating securities in accordance with ASC 260.  Net income (loss) allocated to the holders of our Series B Preferred Stock and unvested restricted stock is calculated based on the shareholders’ proportionate share of weighted average shares of common stock outstanding on an if-converted basis.

For purposes of determining diluted earnings (loss) per common share, basic earnings (loss) per common share is further adjusted to include the effect of potential dilutive common shares outstanding, including stock options, stock appreciation rights, performance share awards and unvested restricted stock using the more dilutive of either the two-class method or the treasury stock method, and convertible debt using the if-converted method.  For the three and six months ended June 30, 2011, all dilutive securities were excluded from the calculation as they were anti-dilutive as a result of the net loss for these respective periods.  Shares outstanding under the share lending facility are not treated as outstanding for earnings per share purposes in accordance with ASC 260, because the share borrower must return to us all borrowed shares (or identical shares) on or about October 1, 2012, or earlier in certain circumstances.  The following table sets forth the components used in the computation of basic and diluted earnings (loss) per common share.

	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
	(Dollars in thousands, except per share amounts)
Numerator:
Net income (loss)	$	14,263		$	(10,519	)	$	22,786		$	(25,316	)
Less: Net (income) loss allocated to preferred shareholder		(6,130	)		4,554			(9,807	)		10,968
Less: Net (income) loss allocated to unvested restricted stock		(15	)		―			(12	)		―
Net income (loss) available to common stockholders	$	8,118		$	(5,965	)	$	12,967		$	(14,348	)
Denominator:
Weighted average basic common shares outstanding		195,746,733			193,577,324			195,427,992			193,369,182
Stock options		5,593,889			―			5,136,047			―
Weighted average diluted common shares outstanding		201,340,622			193,577,324			200,564,039			193,369,182
Income (loss) per common share:
Basic	$	0.04		$	(0.03	)	$	0.07		$	(0.07	)
Diluted	$	0.04		$	(0.03	)	$	0.06		$	(0.07	)

As of June 30, 2012 and 2011, we had 450,829 shares of Series B Preferred Stock outstanding, which are convertible into 147.8 million shares of our common stock.  In accordance with ASC 260, assuming that all of the outstanding Series B Preferred Stock was converted to common stock, all net income (loss) would be allocated to common stock and unvested restricted stock in the computation of earnings (loss) per share.