(18) Earnings Per Share

The Company follows the provisions of ASC Topic 260, “Earnings Per Share,” which requires companies with complex capital structures, such as having two (or more) classes of securities that participate in declared dividends to calculate earnings (loss) per share (“EPS”) utilizing the two-class method. As the holders of the Preferred Stock are entitled to receive dividends with common stock on an as-converted basis, the Preferred Stock has the right to participate in undistributed earnings and must therefore be considered under the two-class method.

The following table sets forth the computation of basic and diluted EPS:


	September 30,
	2012			2011			2010
Income (loss) attributable to common and participating preferred stockholders:
Income (loss) from continuing operations	$	29,915		$	22,226		$	(149,134	)
Loss from discontinued operations		—			—			(2,735	)

Net income (loss)	$	29,915		$	22,226		$	(151,869	)

Participating shares at end of period:
Common stock outstanding		139,357			139,346			139,197
Preferred stock (as-converted basis)		62,839			60,989			—

Total		202,196			200,335			139,197

Percentage of income (loss) allocated to:
Common stock		68.9	%		69.6	%		100	%
Preferred stock		31.1	%		30.4	%		—
Income (loss) attributable to common shares — basic:
Income (loss) from continuing operations	$	20,618		$	15,460		$	(149,134	)
Loss from discontinued operations		—			—			(2,735	)

Net income (loss)	$	20,618		$	15,460		$	(151,869	)

Dilutive adjustments to income (loss) attributable to common stock from assumed conversion of preferred stock, net of tax:
Income allocated to preferred stock in basic calculation	$	—		$	6,766		$	—
Reversal of preferred stock dividends and accretion		—			19,833			—
Reversal of income related to fair value of preferred stock conversion feature		—			(27,910	)		—

Net adjustment	$	—		$	(1,311	)	$	—

Income (loss) attributable to common shares — diluted:
Income (loss) from continuing operations	$	20,618		$	14,149		$	(149,134	)
Loss from discontinued operations		—			—			(2,735	)

Net income (loss)	$	20,618		$	14,149		$	(151,869	)

Weighted-average common shares outstanding — basic		139,356			139,233			132,399
Dilutive effect of preferred stock		—			19,064			—
Dilutive effect of stock options		81			87			—
Dilutive effect of restricted stock and restricted stock units		381			—			—

Weighted-average shares outstanding — diluted		139,818			158,384			132,399

Basic income (loss) per common share attributable to controlling interest:
Continuing operations	$	0.15		$	0.11		$	(1.13	)
Discontinued operations		—			—			(0.02	)

Net income (loss)	$	0.15		$	0.11		$	(1.15	)

Diluted income (loss) per common share attributable to controlling interest:
Continuing operations	$	0.15		$	0.09		$	(1.13	)
Discontinued operations		—			—			(0.02	)

Net income (loss)	$	0.15		$	0.09		$	(1.15	)

The number of shares of common stock outstanding used in calculating the weighted average thereof reflects: (i) for the period prior to the June 16, 2010 (the date of the SB/RH Merger), the number of shares of SBI common stock outstanding multiplied by the 1:1 Spectrum Brands share exchange ratio used in the SB/RH Merger and the 4.32 HGI share exchange ratio used in the Spectrum Brands Acquisition, (ii) for the period from June 16, 2010 to the January 7, 2011 (the date of the Spectrum Brands Acquisition), the number of HGI shares of common stock outstanding plus the 119,910 HGI shares of common stock subsequently issued in connection with the Spectrum Brands Acquisition and (iii) for the periods subsequent to and including January 7, 2011, the actual number of shares of HGI common stock outstanding, excluding unvested restricted stock.

At September 30, 2012, there were 62,839 shares issuable upon the conversion of the Preferred Stock that were excluded from the calculation of “Diluted net income (loss) per common share attributable to controlling interest” because the as-converted effect of the Preferred Stock would have been anti-dilutive for the year ended September 30, 2012. The Preferred Stock had a weighted average conversion price of $6.64.