Windstream 2015 Annual Report Download - page 186

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-56
2. Summary of Significant Accounting Policies and Changes, Continued:
Earnings (Loss) Per Share – We compute basic earnings (loss) per share by dividing net income (loss) 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 (loss) per share pursuant to the two-class method. Calculations
of earnings (loss) 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 earnings (loss) per share are computed by dividing net income (loss) 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 (loss) 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. Options and warrants granted in conjunction with past acquisitions are included in
the computation of dilutive earnings per share using the treasury stock method.
All per share information presented has been retrospectively adjusted to reflect the effects of the one-for-six reverse stock split
which became effective on April 26, 2015. A reconciliation of net income (loss) and number of shares used in computing basic
and diluted earnings (loss) per share was as follows for the years ended December 31:
(Millions, except per share amounts) 2015 2014 2013
Basic and diluted earnings (loss) per share:
Numerator:
Income (loss) from continuing operations $ 27.4 $ (39.5) $ 235.0
Income from continuing operations allocable to participating securities (3.5)(5.0)(4.1)
Adjusted income (loss) from continuing operations attributable to
common shares 23.9 (44.5) 230.9
Income from discontinued operations (a) — — 6.0
Net income (loss) attributable to common shares $ 23.9 $ (44.5) $ 236.9
Denominator:
Basic and diluted shares outstanding
Weighted average shares outstanding 102.0 100.3 98.8
Weighted average participating securities (3.1)(0.8)(0.6)
Weighted average basic and diluted shares outstanding 98.9 99.5 98.2
Basic and diluted earnings (loss) per share:
From continuing operations $.24 ($.45) $2.35
From discontinued operations — — .06
Net income (loss) $.24 ($.45) $2.41
(a) None of the income from discontinued operations was allocable to participating securities in 2013.
Options to purchase shares of stock issuable under stock-based compensation plans that were excluded from the computation of
diluted earnings per share because the exercise prices were greater than the average market price of our common stock and,
therefore, the effect would be anti-dilutive, totaled approximately 0.5 million for both years ended December 31, 2015 and 2014
and 0.7 million shares for the year ended December 31, 2013.