16. Earnings and Dividends Per Share

The following table provides a reconciliation of net income (loss) from continuing operations and the number of common shares used in the computations of “basic” EPS, which utilizes the weighted-average number of common shares outstanding without regard to dilutive potential common shares, and “diluted” EPS, which includes all such shares (in thousands, except per share amounts):


	For the Year Ended December 31,
	2013			2012			2011
Basic Earnings:
Continuing Operations:
Income (loss) from continuing operations	$	1,887		$	21,566		$	(5,603	)
Plus: Gain on disposition of real estate		467			5,863			7,079
Plus: (Loss) income attributable to non-controlling interests		(794	)		(493	)		3,543
Write-off of preferred share original issuance costs		(5,246	)		(5,804	)		(6,402	)
Preferred dividends		(27,721	)		(28,645	)		(31,587	)
Less: Earnings attributable to unvested shares and operating partnership units		(1,367	)		(1,114	)		(488	)

Basic — Loss from continuing operations	$	(32,774	)	$	(8,627	)	$	(33,458	)
Discontinued Operations:
Basic — Loss from discontinued operations		(11,735	)		(52,758	)		(20,873	)

Basic — Net loss attributable to DDR common shareholders after allocation to participating securities	$	(44,509	)	$	(61,385	)	$	(54,331	)

Diluted Earnings:
Continuing Operations:
Basic — Loss from continuing operations attributable to DDR common shareholders	$	(31,407	)	$	(7,513	)	$	(32,970	)
Less: Earnings attributable to unvested shares and operating partnership units		(1,367	)		(1,114	)		(488	)
Less: Fair value of Otto Family warrants		—			—			(21,926	)

Diluted — Loss from continuing operations	$	(32,774	)	$	(8,627	)	$	(55,384	)
Discontinued Operations:
Basic — Loss from discontinued operations		(11,735	)		(52,758	)		(20,873	)

Diluted — Net loss attributable to DDR common shareholders after allocation to participating securities	$	(44,509	)	$	(61,385	)	$	(76,257	)

Number of Shares:
Basic — Average shares outstanding		326,426			291,726			270,278

Effect of dilutive securities — Warrants		—			—			1,194

Diluted — Average shares outstanding		326,426			291,726			271,472

Basic Earnings Per Share:
Loss from continuing operations attributable to DDR common shareholders	$	(0.10	)	$	(0.03	)	$	(0.12	)
Loss from discontinued operations attributable to DDR common shareholders		(0.04	)		(0.18	)		(0.08	)

Net loss attributable to DDR common shareholders	$	(0.14	)	$	(0.21	)	$	(0.20	)

Dilutive Earnings Per Share:
Loss from continuing operations attributable to DDR common shareholders	$	(0.10	)	$	(0.03	)	$	(0.20	)
Loss from discontinued operations attributable to DDR common shareholders		(0.04	)		(0.18	)		(0.08	)

Net loss attributable to DDR common shareholders	$	(0.14	)	$	(0.21	)	$	(0.28	)

Basic average shares outstanding do not include restricted shares totaling 1.8 million, 2.4 million and 1.9 million that were not vested at December 31, 2013, 2012, and 2011, respectively (Note 15).

The following potentially dilutive securities are considered in the calculation of EPS as described below:

Potentially Dilutive Securities

•

Options to purchase 2.7 million, 2.6 million and 2.7 million common shares were outstanding at December 31, 2013, 2012 and 2011, respectively (Note 15). These outstanding options were not considered in the computation of diluted EPS for all of the periods presented, as the options were anti-dilutive due to the Company’s loss from continuing operations.

•

The exchange into common shares associated with OP Units was not included in the computation of diluted shares outstanding for 2013, 2012 or 2011 because the effect of assuming conversion was anti-dilutive (Note 10).

•

The Company’s senior convertible notes due 2040, which are convertible into common shares of the Company with a conversion price of $15.33 at December 31, 2013, were not included in the computation of diluted EPS for all periods presented because the Company’s common share price did not exceed 125% of the conversion price (Note 7) and would therefore be anti-dilutive. The Company’s senior convertible notes due 2012 and 2011, which were convertible into common shares of the Company, were not included in the computation of diluted EPS for all periods presented because the Company’s common share price did not exceed the conversion prices in these periods and would therefore have been anti-dilutive. The senior convertible notes due 2012 and the senior convertible notes due 2011 were repaid at maturity. In addition, the purchased options related to these two senior convertible note issuances were not included in the computation of diluted EPS for all periods presented because the purchase options were anti-dilutive.

•

Shares subject to issuance under the Company’s 2013 VSEP (Note 15) were not considered in the computation of diluted EPS for the year ended December 2013 as the calculation was anti-dilutive. This agreement was not in effect in 2012 or 2011. Shares subject to issuance under the Company’s 2009 VSEP (Note 15) were not considered in the computation of diluted EPS for the year ended December 2011 because they were anti-dilutive due to the Company’s loss from continuing operations. The final measurement period was December 31, 2012, and, accordingly, the shares were not considered for the 2013 or 2012 computation.

•

Common shares that were subject to the forward equity agreements were not included in the computation of diluted EPS using the treasury stock method prior to the date of settlement because they were anti-dilutive due to the Company’s loss from continuing operations and are as follows (shares in millions):


Contract Date	Settlement Date	Number of Common Shares
May 2013	September and October 2013		39.1
January 2012	June 2012		19.0
March 2011	April 2011		9.5

•

Warrants to purchase 10.0 million common shares issued in 2009 and exercised in March 2011 were dilutive for 2011 and were included in the calculation of diluted EPS (Note 10). This agreement was not in effect in 2013 or 2012 as the warrants were exercised in March 2011.