Computation of Earnings per Share

6 Months Ended

Jun. 30, 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						Six Months Ended
	June 30,						June 30,
(in thousands, except share and per share data)	2016			2015			2016			2015
Net income	$	126,460		$	123,704		$	256,369		$	242,963
Less: Dividends paid on and earnings allocated to participating securities		(983	)		(911	)		(1,962	)		(1,760	)

Earnings applicable to common stock	$	125,477		$	122,793		$	254,407		$	241,203

Weighted average common shares outstanding		485,303,073			442,721,173			484,954,235			442,357,774

Basic earnings per common share	$	0.26		$	0.28		$	0.52		$	0.55

Earnings applicable to common stock	$	125,477		$	122,793		$	254,407		$	241,203

Weighted average common shares outstanding		485,303,073			442,721,173			484,954,235			442,357,774
Potential dilutive common shares ⁽¹⁾		—			—			—			—

Total shares for diluted earnings per share computation		485,303,073			442,721,173			484,954,235			442,357,774

Diluted earnings per common share and common share equivalents	$	0.26		$	0.28		$	0.52		$	0.55

(1)

At June 30, 2016, there were no stock options outstanding. Options to purchase 10,000 shares of the Company’s common stock that were outstanding in the three and six months ended June 30, 2015, at weighted average exercise prices of $18.41 per share were excluded from the computation of diluted EPS because their inclusion would have had an antidilutive effect.