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Earnings Per Share Data ("EPS") and Stock Based Compensation
 3 Months Ended
Mar. 31, 2015
Earnings Per Share Data ("EPS") and Stock Based Compensation

(7) Earnings Per Share Data (“EPS”) and Stock Based Compensation

Basic earnings per share are based on the weighted average number of common shares outstanding during the period. Diluted earnings per share are based on the weighted average number of common shares outstanding during the period adjusted to give effect to common stock equivalents.

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated (in thousands, except per share data):

 

     Three months ended
March 31,		  
     2015      2014  

Basic and Diluted:

      

Net income attributable to UHS

    $ 174,299       $ 138,078   

Less: Net income attributable to unvested restricted share grants

      (68 )       (70 ) 
  

 

 

     

 

 

  

Net income attributable to UHS – basic and diluted

 $ 174,231    $ 138,008   
  

 

 

     

 

 

  

Weighted average number of common shares - basic

   98,910      98,572   

Net effect of dilutive stock options and grants based on the treasury stock method

   1,737      1,585   
  

 

 

     

 

 

  

Weighted average number of common shares and equivalents - diluted

   100,647      100,157   
  

 

 

     

 

 

  

Earnings per basic share attributable to UHS:

 $ 1.76    $ 1.40   
  

 

 

     

 

 

  

Earnings per diluted share attributable to UHS:

 $ 1.73    $ 1.38   
  

 

 

     

 

 

  

The “Net effect of dilutive stock options and grants based on the treasury stock method”, for all periods presented above, excludes certain outstanding stock options applicable to each period since the effect would have been anti-dilutive. The excluded weighted-average stock options totaled 3.0 million for the three months ended March 31, 2015. There were no anti-dilutive stock options during the three months ended March 31, 2014. All classes of our common stock have the same dividend rights.

Stock-Based Compensation: During the three-month periods ended March 31, 2015 and 2014, compensation cost of $10.5 million and $6.8 million, respectively, was recognized related to outstanding stock options. In addition, during the three-month periods ended March 31, 2015 and 2014, compensation cost of approximately $219,000 and $409,000, respectively, was recognized related to restricted stock. As of March 31, 2015 there was $93.9 million of unrecognized compensation cost related to unvested options and restricted stock which is expected to be recognized over the remaining weighted average vesting period of 3.2 years. There were 2,964,850 stock options granted (net of cancellations) during the first three months of 2015 with a weighted-average grant date fair value of $21.28 per share.

The expense associated with share-based compensation arrangements is a non-cash charge. In the Consolidated Statements of Cash Flows, share-based compensation expense is an adjustment to reconcile net income to cash provided by operating activities and aggregated to $10.8 million and $7.2 million during the three-month periods ended March 31, 2015 and 2014, respectively. In accordance with ASC 718, excess income tax benefits related to stock based compensation are classified as cash inflows from financing activities on the Consolidated Statement of Cash Flows. During the first three months of 2015 and 2014, we generated $20.1 million and $11.7 million, respectively, of excess income tax benefits related to stock based compensation which are reflected as cash inflows from financing activities in our Consolidated Statements of Cash Flows.