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5 - EARNINGS PER COMMON SHARE
The computation of net (loss) income per share of common stock and Class B shares is in accordance with ASC 260 — “Earnings Per Share,” using the two-class method. Under these provisions, basic net (loss) income per share is computed using the weighted-average number of common shares and Class B shares outstanding during the year, except that it does not include nonvested stock awards subject to repurchase or cancellation. Diluted net (loss) income per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of nonvested stock awards (see Note 14 — Nonvested Stock Awards) for the common shares, for which the assumed proceeds upon vesting are deemed to be the amount of compensation cost attributable to future services and not yet recognized using the treasury stock method, to the extent dilutive. Of the 545,750 nonvested shares outstanding at December 31, 2011 (see Note 14 — Nonvested Stock Awards), 12,500 shares are anti-dilutive. The computation of the diluted net (loss) income per share of common stock assumes the conversion of Class B shares, while the diluted net (loss) income per share of Class B stock does not assume the conversion of those shares.
Under the Company’s Amended and Restated Articles of Incorporation, the rights, including dividend rights, of the holders of the Company’s common and Class B shares are identical, except with respect to voting. Further, the Company’s Amended and Restated Articles of Incorporation and Marshall Islands law embody safeguards against modifying the identical rights of the Company’s common stock and Class B stock to dividends. Specifically, Marshall Islands law provides that amendments to the Company’s Amended and Restated Articles of Incorporation which would have the effect of adversely altering the powers, preferences, or special rights of a given class of stock (in this case the right of the Company’s common stock to receive an equal dividend to any declared on the Company’s Class B stock) must be approved by the class of stock adversely affected by the proposed amendment. As a result, and in accordance with ASC 260 — “Earnings Per Share,” the undistributed earnings are allocated based on the contractual participation rights of the common and Class B shares as if the earnings for the year had been distributed. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Further, as the conversion of Class B shares is assumed in the computation of the diluted net income per share of common stock, the undistributed earnings are equal to net income for that computation.
The Company was formed with 100 shares of capital stock during October of 2009, and on March 3, 2010, Genco made an additional capital contribution of $75,000,000 and surrendered the 100 shares of capital stock for 5,699,088 shares of Class B stock. The net loss attributable to the period from January 1, 2010 to March 2, 2010 was insignificant and therefore the Company has not allocated any of the net loss during that period to the capital stock. The following table sets forth the computation of basic and diluted net (loss) income per share of capital stock, common stock and Class B stock:
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Year Ended December 31,
2011 |
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|
|
|
Common |
|
Class B |
|
|
Basic net loss per share: |
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
Allocation of loss |
|
$ |
(319,967 |
) |
$ |
(111,145 |
) |
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|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
Weighted-average shares outstanding, basic |
|
16,406,580 |
|
5,699,088 |
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|
|
|
|
|
|
|
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Basic net loss per share |
|
$ |
(0.02 |
) |
$ |
(0.02 |
) |
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|
|
|
|
|
|
|
Diluted net loss per share: |
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
Allocation of loss |
|
$ |
(319,967 |
) |
$ |
(111,145 |
) |
|
Reallocation of undistributed loss as a result of conversion of Class B to common shares |
|
(2,675,735 |
) |
— |
|
|
Reallocation of dividends paid as a result of conversion of Class B to common shares |
|
2,564,590 |
|
— |
|
|
Allocation of loss |
|
$ |
(431,112 |
) |
$ |
(111,145 |
) |
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
Weighted-average shares outstanding used in basic computation |
|
16,406,580 |
|
5,699,088 |
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Add: |
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|
|
|
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Conversion of Class B to common shares |
|
5,699,088 |
|
— |
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|
|
|
|
|
|
|
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Weighted-average shares outstanding, diluted |
|
22,105,668 |
|
5,699,088 |
|
|
|
|
|
|
|
|
|
Diluted net loss per share |
|
$ |
(0.02 |
) |
$ |
(0.02 |
) |
|
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|
Year Ended December 31, 2010 |
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|
|
|
Capital Stock |
|
Common |
|
Class B |
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|
Basic net income per share: |
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|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
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Allocation of undistributed earnings |
|
$ |
— |
|
$ |
6,129,001 |
|
$ |
2,193,434 |
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|
|
|
|
|
|
|
|
|
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Denominator: |
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|
|
|
|
|
|
|
Weighted-average shares outstanding, basic |
|
17 |
|
13,263,288 |
|
4,746,638 |
|
|
|
|
|
|
|
|
|
|
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Basic net income per share |
|
$ |
— |
|
$ |
0.46 |
|
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share: |
|
|
|
|
|
|
|
|
Numerator: |
|
|
|
|
|
|
|
|
Allocation of undistributed earnings |
|
$ |
— |
|
$ |
6,129,001 |
|
$ |
2,193,434 |
|
|
Reallocation of undistributed earnings as a result of conversion of Class B to common shares |
|
— |
|
369,726 |
|
— |
|
|
Reallocation of dividends paid as a result of conversion of Class B to common shares |
|
|
|
1,823,708 |
|
— |
|
|
Reallocation of undistributed earnings to Class B shares |
|
— |
|
— |
|
(3,750 |
) |
|
Allocation of earnings |
|
$ |
— |
|
$ |
8,322,435 |
|
$ |
2,189,684 |
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
Weighted-average shares outstanding used in basic computation |
|
17 |
|
13,263,288 |
|
4,746,638 |
|
|
Add: |
|
|
|
|
|
|
|
|
Conversion of Class B to common shares |
|
— |
|
4,746,638 |
|
— |
|
|
Dilutive effect of nonvested stock awards |
|
— |
|
30,843 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding, diluted |
|
17 |
|
18,040,769 |
|
4,746,638 |
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per share |
|
$ |
— |
|
$ |
0.46 |
|
$ |
0.46 | |