Windstream 2014 Annual Report Download - page 167

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-51
2. Summary of Significant Accounting Policies and Changes, Continued:
Earnings Per Share – We compute basic (loss) earnings per share by dividing net (loss) income applicable to common shares by
the weighted average number of common shares outstanding during each period. Our non-vested restricted shares containing a
non-forfeitable right to receive dividends on a one-to-one per share ratio to common shares are considered participating securities,
and the impact is included in the computation of earnings per share pursuant to the two-class method. Calculations of earnings
per share under the two-class method exclude from the numerator any dividends paid or owed on participating securities and any
undistributed earnings considered to be attributable to participating securities. The related participating securities are similarly
excluded from the denominator.
Diluted (loss) earnings per share are computed by dividing net (loss) income applicable to common shares by the weighted average
number of common shares adjusted to include the effect of potentially dilutive securities. Potentially dilutive securities include
incremental shares issuable upon exercise of outstanding stock options and warrants. Diluted earnings per share exclude all
potentially dilutive securities if their effect is anti-dilutive.
We also issue performance-based restricted stock units as part of our share-based compensation plan. These restricted stock units
contain a forfeitable right to receive dividends. Because dividends attributable to these shares are forfeited if the vesting provisions
are not met, they are considered non-participating restricted shares and are not dilutive under the two class method until the
performance conditions have been satisfied. The 2014 performance conditions for the outstanding restricted stock units were not
satisfied, and therefore, these stock units were excluded from the computation of diluted weighted average shares outstanding.
Options and warrants granted in conjunction with the acquisition of PAETEC are included in the computation of dilutive earnings
per share using the treasury stock method.
A reconciliation of net (loss) income and number of shares used in computing basic and diluted (loss) earnings per share was as
follows for the years ended December 31:
(Millions, except per share amounts) 2014 2013 2012
Basic and diluted (loss) earnings per share:
Numerator:
(Loss) income from continuing operations $(39.5) $ 235.0 $ 167.1
Income from continuing operations allocable to participating securities (5.0)(4.1)(3.6)
Adjusted (loss) income from continuing operations attributable to
common shares (44.5) 230.9 163.5
Income from discontinued operations — 6.0 0.9
Income from discontinued operations allocable to participating
securities ———
Adjusted income from discontinued operations attributable to
common shares — 6.0 0.9
Net (loss) income attributable to common shares $(44.5) $ 236.9 $ 164.4
Denominator:
Basic shares outstanding
Weighted average shares outstanding 601.5 593.2 588.0
Weighted average participating securities (4.6)(3.9)(3.5)
Weighted average basic shares outstanding 596.9 589.3 584.5
Diluted shares outstanding
Weighted average basic shares outstanding 596.9 589.3 584.5
Effect of dilutive stock options — 0.4 1.8
Weighted average diluted shares outstanding 596.9 589.7 586.3
Basic and diluted (loss) earnings per share:
From continuing operations ($.07) $.39 $.28
From discontinued operations —.01 —
Net (loss) income ($.07) $.40 $.28