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Earnings And Dividends Per Share
9 Months Ended
Sep. 30, 2011
Earnings And Dividends Per Share [Abstract] 
Earnings And Dividends Per Share

7. Earnings and Dividends Per Share

For the three and nine months ended September 30, 2011, basic weighted average common shares outstanding were 14,371,752 and 14,340,119, respectively, and for the three and nine months ended September 30, 2010, basic weighted average common shares outstanding were 14,320,188 and 14,304,554, respectively. For the three and nine months ended September 30, 2011, diluted common shares outstanding were 17,157,305 and 17,130,767, respectively, and for the three and nine months ended September 30, 2010, diluted common shares outstanding were 17,128,215 and 14,396,965, respectively.

 

The Company adopted ASC 260-10-65-2, "Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities." Non-vested shares with non-forfeitable dividend rights are considered participating securities and, thus, subject to the two-class method pursuant to ASC Topic 260, "Earnings per Share", when computing basic and diluted EPS. Losses are only allocable to participating securities if the holder has a contractual obligation to share in the losses of the Company.

Holders of our restricted stock awards participate in nonforfeitable dividend rights on a one-for-one basis with holders of common stock. Holders of these awards are not obligated to share in losses of the Company. Therefore, these share awards are included in the computation of basic earnings (loss) per share during periods of net income using the two-class method, but are excluded from such computation in periods of net loss. Should the Company declare a dividend on its common stock, the related dividend on shares of unvested restricted stock that are not expected to vest would be recorded as additional compensation expense and therefore excluded from the two-class method computations. Undistributed earnings included in the two-class method computations are allocated equally to each share of common stock outstanding, including all shares of unvested restricted common shares. For the three and nine month periods ended September 30, 2011, there were no non-vested restricted share awards outstanding. For the three and nine month periods ended September 30, 2010, the weighted average number of non-vested restricted share awards which were included in the basic weighted average common shares outstanding totaled 1,449 and 28,468, respectively.

We consider outstanding options and warrants in computing diluted net income per share only when they are dilutive. For the three and nine month periods ended September 30, 2011, 427,500 and 426,241, respectively, outstanding options and warrants were excluded from the computation of diluted weighted average common shares outstanding as their effect would have been anti-dilutive. For the three and nine month periods ended September 30, 2010, 480,000 and 599,000, respectively, outstanding options and warrants were excluded from the computation of diluted weighted average common shares outstanding as their effect would have been anti-dilutive. Additionally, pursuant to the if-converted method, net income used for purposes of computing diluted earnings per share is adjusted for the net impact of interest and other items related to the Investor Notes (see Note 8) unless the effect is anti-dilutive. The net impact of interest and other items related to the Investor Notes for the three and nine month periods ended September 30, 2011 was expense of approximately $95,000 and $285,000, respectively. Net income was adjusted by this net impact for the three month and nine month periods ended September 30, 2011 and 2,622,011 and 2,646,612 shares, respectively, were included in the computation of diluted weighted average common shares outstanding. The net impact of interest and other items related to the Investor Notes for the three and nine month periods ended September 30, 2010 was expense of approximately $97,000 and $296,000, respectively. Net income was adjusted by this net impact for the three month period ended September 30, 2010 and 2,700,000 shares were included in the computation of diluted weighted average common shares outstanding. Because of an anti-dilutive effect, net income (loss) was not adjusted for this net impact for the nine month period ended September 30, 2010 and 2,700,000 shares were excluded from the computation of diluted weighted average common shares outstanding.

The Company declared and paid on September 30, 2011 to common shareholders its first ever quarterly dividend of $0.025 per share. The dividend policy and the payment of cash dividends under that policy are subject to the Board of Director's continuing determination that the dividend policy and the declaration of dividends are in the best interest of CECO's shareholders. Future dividends and the dividend policy may be changed or cancelled at the Company's discretion at any time.