Earnings Per Share

3 Months Ended

Nov. 30, 2014

Earnings Per Share

Note 8 – Earnings Per Share

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

(In thousands)	Three Months Ended November 30,
	2014		2013
Weighted average basic common shares outstanding (1)		27,665		28,417
Dilutive effect of 2018 Convertible notes (2)		6,044		6,045
Dilutive effect of 2026 Convertible notes (3)		4		—
Weighted average diluted common shares outstanding		33,713		34,462

(1) Restricted stock grants and restricted stock units, including some grants subject to certain performance criteria, are included in weighted average basic common shares outstanding when the Company is in a net earnings position.

(2) The dilutive effect of the 2018 Convertible notes was included for the three months ended November 30, 2014 and 2013 as they were considered dilutive under the “if converted” method as further discussed below.

(3) The dilutive effect of the 2026 Convertible notes was included for the three months ended November 30, 2014 as the average stock price was greater than $48.05. The effect of the 2026 Convertible notes was excluded for the three months ended November 30, 2013 as the average stock price was less than $48.05 and therefore was considered anti-dilutive.

Dilutive EPS for the three months ended November 30, 2014 and 2013 was calculated using the more dilutive of two approaches. The first approach includes the dilutive effect of 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 the shares underlying the convertible notes. The 2026 Convertible notes are included in the calculation of both approaches using the treasury stock method when the average stock price is greater than the initial conversion price of $48.05.

	Three Months Ended November 30,
	2014		2013
Net earnings attributable to Greenbrier	$	32,786	$	15,388
Add back:
Interest and debt issuance costs on the 2018 Convertible notes, net of tax		1,416		1,416
Earnings before interest and debt issuance costs on convertible notes	$	34,202	$	16,804
Weighted average diluted common shares outstanding		33,713		34,462
Diluted earnings per share (1)	$	1.01	$	0.49

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

Earnings before interest and debt issuance costs (net of tax) on convertible notes

Weighted average diluted common shares outstanding