Note 3 - Earnings Per Common Share

Basic earnings per share was determined by dividing net income allocable to common stockholders for the applicable period by the weighted average number of shares of common stock outstanding during such period. Net income is also allocated to the unvested restricted stock during the applicable period, as the restricted stock is entitled to receive dividends and is therefore considered a participating security. Unvested restricted stock is not allocated net losses and/or any excess of dividends declared over net income; such amounts are allocated entirely to the common stockholders other than the holders of unvested restricted stock. The restricted stock units awarded under the Pay-for-Performance program described in Note 13 are excluded from the basic earnings per share calculation, as these units are not participating securities.

Diluted earnings per share reflects the potential dilution that could occur if securities or other rights exercisable for, or convertible into, common stock were exercised or converted or otherwise resulted in the issuance of common stock that shared in the earnings of the Company. For the three and six months ended June 30, 2014 and 2013, the diluted weighted average number of common shares includes 100,000 shares (of an aggregate of 200,000 shares) of common stock underlying the restricted stock units awarded pursuant to the Pay-For-Performance program. These 100,000 shares may vest upon satisfaction of the total stockholder return metric. The number of shares that would be issued pursuant to this metric is based on the market price and dividends paid as of the end of each quarterly period assuming the end of that quarterly period was the end of the vesting period. The remaining 100,000 shares of common stock underlying the restricted stock units awarded under the Pay-For-Performance program are not included during the three and six months ended June 30, 2014 and 2013, as they did not meet the return on capital performance metric during such periods.

There were no options outstanding to purchase shares of common stock or other rights exercisable for, or convertible into, common stock during the six months ended June 30, 2014 and 2013.

The following table provides a reconciliation of the numerator and denominator of earnings per share calculations (amounts in thousands, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Numerator for basic and diluted earnings per share:

Income from continuing operations	$	4,662		$	7,607		$	7,949		$	10,920
Less: net income attributable to non-controlling interests	(22		)	(16		)	(49		)	(15		)
Less: earnings allocated to unvested shares	(178		)	—			(356		)	—
Income from continuing operations available for common stockholders	4,462			7,591			7,544			10,905
Discontinued operations	—			145			13			281
Net income available for common stockholders, basic and diluted	$	4,462		$	7,736		$	7,557		$	11,186

Denominator for basic earnings per share:
- weighted average common shares	15,518			14,844			15,436			14,759
- weighted average unvested restricted stock shares	—			470			—			477
	15,518			15,314			15,436			15,236
Effect of diluted securities:
- restricted stock units awarded under Pay-for-Performance program	100			100			100			100
Denominator for diluted earnings per share
- weighted average shares	15,618			15,414			15,536			15,336

Earnings per common share, basic	$	.29		$	.51		$	.49		$	.73
Earnings per common share, diluted	$	.29		$	.50		$	.49		$	.73

Net Income attributable to One Liberty Properties, Inc. common stockholders, net of non-controlling interests:
Income from continuing operations	$	4,640		$	7,591		$	7,900		$	10,905
Income from discontinued operations	—			145			13			281

Net income attributable to One Liberty Properties, Inc.	$	4,640		$	7,736		$	7,913		$	11,186