Computation of Earnings per Share

3 Months Ended

Mar. 31, 2016

Note 2. Computation of Earnings per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the same method as basic EPS, however, the computation reflects the potential dilution that would occur if outstanding in-the-money stock options were exercised and converted into common stock.

Unvested stock-based compensation awards containing non-forfeitable rights to dividends are considered participating securities, and therefore are included in the two-class method for calculating EPS. Under the two-class method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. The Company grants restricted stock to certain employees under its stock-based compensation plans. Recipients receive cash dividends during the vesting periods of these awards, including on the unvested portion of such awards. Since these dividends are non-forfeitable, the unvested awards are considered participating securities and therefore have earnings allocated to them.

The following table presents the Company’s computation of basic and diluted EPS for the periods indicated:


	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2016			2015
Net income	$	129,909		$	119,259
Less: Dividends paid on and earnings allocated to participating securities		(979	)		(872	)

Earnings applicable to common stock	$	128,930		$	118,387


Weighted average common shares outstanding		484,605,397			441,990,338

Basic earnings per common share	$	0.27		$	0.27


Earnings applicable to common stock	$	128,930		$	118,387


Weighted average common shares outstanding		484,605,397			441,990,338
Potential dilutive common shares ⁽¹⁾		—			—

Total shares for diluted earnings per share computation		484,605,397			441,990,338

Diluted earnings per common share and common share equivalents	$	0.27		$	0.27

(1)

At March 31, 2016, there were no stock options outstanding. Options to purchase 32,400 shares of the Company’s common stock that were outstanding as of March 31, 2015 at weighted average exercise prices of $18.15 per share were excluded from the computation of diluted EPS because their inclusion would have had an antidilutive effect.