Earnings Per Share

6 Months Ended

Jun. 30, 2011

14. EARNINGS PER SHARE

The Company’s unvested restricted share units contain rights to receive nonforfeitable dividends, and thus are participating securities requiring the two-class method of computing earnings per share (“EPS”). Under the two-class method, EPS is computed by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period. The following table provides a reconciliation of net income (loss) from continuing operations and the number of common shares used in the computations of “basic” EPS, which uses the weighted average number of common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares (in thousands, except per share amounts):


	Three-Month Periods						Six-Month Periods
	Ended June 30,						Ended June 30,
	2011			2010			2011			2010

Basic Earnings:
Continuing Operations:
(Loss) income from continuing operations	$	(6,455	)	$	(55,330	)	$	31,293		$	(74,292	)
Plus: Gain (loss) on disposition of real estate		2,310			592			1,449			(83	)
Plus: (Loss) income attributable to non-controlling interests		(114	)		12,296			(181	)		12,194

(Loss) income from continuing operations attributable to DDR		(4,259	)		(42,442	)		32,561			(62,181	)
Write-off of original preferred share issuance costs		(6,402	)		—			(6,402	)		—
Preferred dividends		(7,085	)		(10,567	)		(17,653	)		(21,134	)

Basic — (Loss) income from continuing operations attributable to DDR common shareholders		(17,746	)		(53,009	)		8,506			(83,315	)
Less: Earnings attributable to unvested shares and operating partnership units		(93	)		(31	)		(203	)		(62	)

Basic — (Loss) income from continuing operations	$	(17,839	)	$	(53,040	)	$	8,303		$	(83,377	)

Discontinued Operations:
Loss from discontinued operations		(9,124	)		(66,428	)		(10,632	)		(73,375	)
Plus: Loss attributable to non-controlling interests		—			22,295			—			24,734

Basic — Loss from discontinued operations		(9,124	)		(44,133	)		(10,632	)		(48,641	)
Basic — Net loss attributable to DDR common shareholders after allocation to participating securities	$	(26,963	)	$	(97,173	)	$	(2,329	)	$	(132,018	)


Diluted Earnings:
Continuing Operations:
Basic — Net (loss) income attributable to DDR common shareholders	$	(17,746	)	$	(53,009	)	$	8,506		$	(83,315	)
Less: Earnings attributable to unvested shares and operating partnership units		(93	)		(31	)		(203	)		(62	)
Less: Fair value adjustment for Otto Family warrants		—			(21,527	)		(21,926	)		—

Diluted — Loss from continuing operations		(17,839	)		(74,567	)		(13,623	)		(83,377	)

Discontinued Operations:
Basic — Loss from discontinued operations		(9,124	)		(44,133	)		(10,632	)		(48,641	)

Diluted—Net loss attributable to DDR common shareholders after allocation to participating securities	$	(26,963	)	$	(118,700	)	$	(24,255	)	$	(132,018	)


Number of Shares:
Basic — Average shares outstanding		274,299			248,533			265,094			237,892
Effect of dilutive securities:
Warrants		—			5,006			2,406			—
Value sharing equity program		—			—			1,111			—
Stock options		—			—			555			—
Forward equity agreement		—			—			12			—

Diluted — Average shares outstanding		274,299			253,539			269,178			237,892


Basic Earnings Per Share:
(Loss) income from continuing operations attributable to DDR common shareholders	$	(0.07	)	$	(0.21	)	$	0.03		$	(0.35	)
Loss from discontinued operations attributable to DDR common shareholders		(0.03	)		(0.18	)		(0.04	)		(0.20	)

Net loss attributable to DDR common shareholders	$	(0.10	)	$	(0.39	)	$	(0.01	)	$	(0.55	)


Dilutive Earnings Per Share:
Loss from continuing operations attributable to DDR common shareholders	$	(0.07	)	$	(0.30	)	$	(0.05	)	$	(0.35	)
Loss from discontinued operations attributable to DDR common shareholders		(0.03	)		(0.17	)		(0.04	)		(0.20	)

Net loss attributable to DDR common shareholders	$	(0.10	)	$	(0.47	)	$	(0.09	)	$	(0.55	)

The following potentially dilutive securities are considered in the calculation of EPS as described below:

Dilutive Securities

	•		Warrants to purchase 10.0 million common shares issued in 2009 are considered in the computation of diluted EPS for the period outstanding from January 1, 2011 to March 18, 2011 and the three-month period ended June 30, 2010. The warrants were anti-dilutive for the six-month period ended June 30, 2010.

			For the three-month period ended June 30, 2010, the Company’s quarterly report on Form 10-Q excluded the dilutive effect of the warrants and thus overstated diluted earnings per share. Management has concluded that the impact on its diluted earnings per share resulting from this error was not material. The revision to the amounts above for the three-month period ended June 30, 2010, decreased previously reported diluted earnings per share by $0.08.

	•		Shares subject to issuance under the Company’s value sharing equity program (“VSEP”) are considered in the computation of diluted EPS for the six-month period ended June 30, 2011. The shares subject to issuance under the VSEP were not considered in the computation of diluted EPS for the three-month period ended June 30, 2011 and the three- and six-month periods ended June 30, 2010, as the shares were anti-dilutive due to the Company’s loss from continuing operations.

	•		Options to purchase 3.2 million and 3.4 million common shares were outstanding at June 30, 2011 and 2010, respectively. A portion of these options are considered in the computation of diluted EPS using the treasury stock method for the six-month period ended June 30, 2011. Options aggregating 2.1 million were anti-dilutive in the calculation and, accordingly, were excluded from the computation for the three-month period ended June 30, 2011. Options aggregating 3.4 million were not considered in the computation of diluted EPS for the three-and six-month periods ended June 30, 2010, as the options were anti-dilutive due to the Company’s loss from continuing operations.

	•		The forward equity agreement entered into in March 2011 for 9.5 million common shares was included in the computation of diluted EPS using the treasury stock method for the six-month period ended June 30, 2011. The forward equity agreement was anti-dilutive for the three-month period ended June 30, 2011. These shares were issued in April 2011. This agreement was not in effect in 2010.

			Anti-dilutive Securities:

	•		The Company’s three series of senior convertible notes, which are convertible into common shares of the Company with conversion prices of approximately $74.56, $64.23 and $16.33, respectively, at June 30, 2011, were not included in the computation of diluted EPS for the three- and six-month periods ended June 30, 2011 and 2010, because the Company’s common share price did not exceed the conversion prices of the conversion features in these periods and would therefore be anti-dilutive. The senior convertible notes with a conversion price of $16.33 were not outstanding at June 30, 2010. In addition, the purchased options related to two of the senior convertible notes issuances are not included in the computation of diluted EPS as the purchase options are anti-dilutive.