EARNINGS PER SHARE

9 Months Ended

Jun. 30, 2016

9. EARNINGS PER SHARE

The Company computes earnings per share (“EPS”) in accordance with GAAP. GAAP provides for the calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company.

Potential common stock shares consist of shares that may arise from outstanding dilutive common stock warrants and options (the number of which is computed using the “treasury stock method”) and from outstanding convertible debentures (the number of which is computed using the “if converted method”).

Diluted EPS considers the potential dilution that could occur if the Company’s outstanding common stock options, warrants and convertible debentures were converted into common stock that then shared in the Company’s earnings (as adjusted for interest expense that would no longer occur if the debentures were converted).

(In thousands except for per share information)	FOR THE QUARTER				FOR THE NINE MONTHS
	ENDED JUNE 30,				ENDED JUNE 30,
	2016		2015		2016		2015
Basic earnings per share:
Net income attributable to RCIHH shareholders	$	2,653	$	8,267	$	10,710	$	8,786
Average number of common shares outstanding		9,906		10,245		10,071		10,262
Basic earnings per share - net income attributable to RCIHH shareholders	$	0.27	$	0.81	$	1.06	$	0.86
Diluted earnings per share:
Net income attributable to RCIHH shareholders	$	2,653	$	8,267	$	10,710	$	8,786
Adustment. to net earnings from assumed conversion of debentures (1)		33		118		100		356
Adjusted net income attributable to RCIHH shareholders	$	2,686	$	8,385	$	10,810	$	9,142
Average number of common shares outstanding:
Common shares outstanding		9,906		10,245		10,071		10,262
Potential dilutive shares resulting from exercise of warrants and options (2)		1		-		-		-
Potential dilutive shares resulting from conversion of debentures (3)		140		462		140		462
Total average number of common shares outstanding used for dilution		10,047		10,707		10,211		10,724
Diluted earnings per share - net income attributable to RCIHH shareholders	$	0.27	$	0.78	$	1.06	$	0.85

(1) Represents interest expense on dilutive convertible debentures that would not occur if they were assumed converted.

(2) All outstanding warrants and options were considered for the EPS computation. Potential dilutive options and warrants of 121,180 and 172,400 for the three and nine months ended June 30, 2016 and 2015, respectively, have been excluded from earnings per share due to being anti-dilutive.

(3) Convertible debentures (principal and accrued interest) outstanding at June 30, 2016 and 2015 totaling $1.6 million and $5.3 million, respectively, were convertible into common stock at a price of $10.25 to $12.50 per share at June 30, 2016 and $10.00 to $12.50 per share at June 30, 2015. Potential dilutive shares of 462,500 for the three and nine month periods ended June 30, 2015 have been excluded from earnings per share due to being anti-dilutive.

* EPS may not foot due to rounding.