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Earnings Per Share
 3 Months Ended
Mar. 31, 2014
Earnings Per Share  
Earnings Per Share

8. Earnings Per Share

 

The Company computes earnings per share using the two-class method, an earnings allocation formula that determines earnings per share for common stock and participating securities according to dividends declared and participation rights in undistributed earnings, when that method results in a more dilutive effect than the treasury method. The Company’s unvested grants of restricted stock granted prior to 2014 contain non-forfeitable rights to dividends, should any be declared, and are treated as participating securities and included in the computation of earnings per share.

 

The restricted shares granted in 2014 contain a provision making the payment of dividends contingent upon vesting of the shares. These shares are not participating shares because any accumulated unvested dividends are forfeited, along with the shares, if the awards fail to vest. These non-participating shares are excluded from the computation of net income allocated to participating securities in the table below, but are included in the computation of weighted average dilutive securities, unless their inclusion would be anti-dilutive.

 

Net income available to common shareholders and the weighted average number of common shares used to compute basic and diluted earnings per share was as follows:

 

 

 

Three months ended

 

 

 

March 31,

 

(In thousands, except per share data)

 

2014

 

2013

 

Numerator:

 

 

 

 

 

Net income

 

$

6,272

 

$

6,960

 

Less: Net income allocated to participating securities

 

(62

)

(62

)

Net income available to common shareholders

 

$

6,210

 

$

6,898

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

Weighted average common shares outstanding

 

21,036

 

20,661

 

Weighted average dilutive securities

 

477

 

650

 

Weighted average common shares outstanding, diluted

 

21,513

 

21,311

 

 

 

 

 

 

 

Income per common share, basic

 

$

0.30

 

$

0.33

 

Income per common share, diluted

 

$

0.29

 

$

0.32

 

 

For the three months ended March 31, 2014 and 2013, common equivalents related to outstanding stock options of approximately 110,000 and 220,000, respectively, were excluded from the diluted earnings per share calculation because the inclusion of such shares would either be anti-dilutive or the exercise prices of those stock options were greater than the average market price of the Company’s common stock for the period. For the three months ended March 31, 2014, approximately 64,000 shares of non-participating restricted stock were excluded from the diluted earnings per share calculation because the inclusion of such shares would have been anti-dilutive. Additionally, for the three months ended March 31, 2014 and 2013, common equivalents related to approximately 85,000 and 17,000, respectively, of performance shares were excluded from the diluted earnings per share calculation because the inclusion of such shares would have been anti-dilutive.