Earnings per Share

12 Months Ended

Aug. 31, 2012

Earnings per Share

Note 17 - Earnings per Share

The shares used in the computation of the Company’s basic and diluted earnings per common share are reconciled as follows:

	Years ended August 31,
(In thousands)	2012		2011		2010
Weighted average basic common shares outstanding(1)		26,572		24,100		18,585
Dilutive effect of employee stock options		–		–		6
Dilutive effect of warrants		1,101		2,401		1,622
Dilutive effect of convertible notes(2)		6,045		–		–
Weighted average diluted common shares outstanding		33,718		26,501		20,213

⁽¹⁾  Restricted stock grants are treated as outstanding when issued and are included in weighted average basic common shares outstanding when the Company is in a net earnings position.

⁽²⁾  In 2012, the dilutive effect of the 2018 Convertible notes are included as they were considered dilutive under the “if converted” method. In 2011, the dilutive effect of the 2.5 million weighted average shares underlying the 2018 Convertible Notes was excluded from the share calculation as it was the less dilutive of two approaches. See Note 2 – Summary of Significant Accounting Policies for a description of the Company’s net earnings per share calculations. The dilutive effect of the 2026 Convertible notes was excluded from the share calculations as the stock price for each year presented was less than the initial conversion price of $48.05 and therefore considered anti-dilutive.

Weighted average diluted common shares outstanding include the incremental shares that would be issued upon the assumed exercise of stock options and warrants. No options or warrants were anti-dilutive for the years ended August 31, 2012, 2011 and 2010.

Dilutive EPS was calculated using the more dilutive of two approaches. The first approach includes the dilutive effect of outstanding warrants and shares underlying the 2026 Convertible notes in the share count using the treasury stock method. The second approach supplements the first by including the “if converted” effect of the 2018 Convertible notes issued in March 2011. Under the “if converted method” debt issuance and interest costs, both net of tax, associated with the convertible notes are added back to net earnings and the share count is increased by shares underlying the convertible notes. The 2026 Convertible notes would only be included in the calculation of both approaches if the current stock price is greater than the initial conversion price of $48.05 using the treasury stock method.

	Year Ended August 31, 2012
Net earnings attributable to Greenbrier	$	58,708
Add back:
Interest and debt issuance costs on the 2018 Convertible notes, net of tax		5,677
Earnings before interest and debt issuance costs on convertible notes	$	64,385
Weighted average diluted common shares outstanding		33,718
Diluted earnings per share	$	1.91	(1)

⁽¹⁾ Diluted earnings per share was calculated as follows:

Earnings before interest and debt issuance costs on convertible notes

          Weighted average diluted common shares outstanding