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Note 18 BASIC AND DILUTED EARNINGS PER SHARE
 3 Months Ended
Mar. 31, 2012
Earnings Per Share [Text Block]

Note 18       Basic and Diluted Earnings per Share


Basic EPS excludes common stock equivalents and is calculated by dividing net income (loss) attributable to OCN by the weighted average number of common shares outstanding during the period. We calculate diluted EPS by dividing net income attributable to OCN, as adjusted to add back interest expense net of income tax on the Convertible Notes, by the weighted average number of common shares outstanding including the potential dilutive common shares related to outstanding stock options, restricted stock awards and the Convertible Notes. The following is a reconciliation of the calculation of basic EPS to diluted EPS for the three months ended March 31:


    2012   2011
Basic EPS:        
Net income attributable to Ocwen Financial Corporation   $ 19,349     $ 22,074  
                 
Weighted average shares of common stock     130,649,595       100,762,446  
                 
Basic EPS   $ 0.15     $ 0.22  
                 
Diluted EPS:                
Net income attributable to Ocwen Financial Corporation   $ 19,349     $ 22,074  
Interest expense on Convertible Notes, net of income tax (1)     99       293  
Adjusted net income attributable to OCN   $ 19,448     $ 22,367  
                 
Weighted average shares of common stock     130,649,595       100,762,446  
Effect of dilutive elements:                
Convertible Notes (1)     4,057,736       4,637,224  
Stock options (2) (3)     3,337,571       2,378,105  
Common stock awards     1,368       —  
Dilutive weighted average shares of common stock     138,046,270       107,777,775  
                 
Diluted EPS   $ 0.14     $ 0.21  
                 
Stock options excluded from the computation of diluted EPS:                
Anti-dilutive(2)     151,250       20,000  
Market-based(3)     558,750       1,615,000  

(1) Prior to the redemption of the Convertible Notes in March 2012, we computed their effect on diluted EPS using the if-converted method. Interest expense and related amortization costs applicable to the Convertible Notes, net of income tax, were added back to net income. We assumed the conversion of the Convertible Notes into shares of common stock for purposes of computing diluted EPS unless the effect was anti-dilutive. The effect is anti-dilutive whenever interest expense on the Convertible Notes, net of income tax, per common share obtainable on conversion exceeds basic EPS. As disclosed in Note 13, we issued 4,635,159 shares of common stock upon conversion of the Convertible Notes.
   
(2) These stock options were anti-dilutive because their exercise price was greater than the average market price of our stock.
   
(3) Shares that are issuable upon the achievement of certain performance criteria related to OCN’s stock price and an annualized rate of return to investors.