Note 7 – Earnings Per Share

We apply the two-class method when computing earnings per share, which requires that net income per share for each class of shares entitled to dividends be calculated assuming all of our net income is distributed as dividends to these shareholders based on their contractual rights.

The following table presents the calculation of basic and diluted earnings per share of common stock outstanding:

 

		Three Months Ended March 31,
		2015								2014
		Basic				Diluted				Basic				Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income		$	70,249			$	70,249			$	73,385			$	73,385
Net loss attributable to noncontrolling interest			(46	)			(46	)			0				0
Net income attributable to Harman International Industries, Incorporated		$	70,295			$	70,295			$	73,385			$	73,385
Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding			69,946				69,946				68,939				68,939
Employee stock options			0				849				0				949
Total weighted average shares outstanding			69,946				70,795				68,939				69,888
Earnings per Share:
Earnings per share		$	1.00			$	0.99			$	1.06			$	1.05

 

		Nine Months Ended March 31,
		2015								2014
		Basic				Diluted				Basic				Diluted
Numerator for Basic and Diluted Earnings per Share:
Net income		$	269,347			$	269,347			$	191,466			$	191,466
Net loss attributable to noncontrolling interest			(156	)			(156	)			0				0
Net income attributable to Harman International Industries, Incorporated		$	269,503			$	269,503			$	191,466			$	191,466
Denominator for Basic and Diluted Earnings per Share:
Weighted average shares outstanding			69,557				69,557				69,067				69,067
Employee stock options			0				765				0				810
Total weighted average shares outstanding			69,557				70,322				69,067				69,877
Earnings per Share:
Earnings per share		$	3.87			$	3.83			$	2.77			$	2.74

Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities, as defined under GAAP, and are included in the computation of earnings per share pursuant to the two-class method.

Certain options were outstanding and not included in the computation of diluted net earnings per share because the assumed exercise of these options would have been antidilutive. Options to purchase 3,892 and 296,317 shares of our common stock for the three months ended March 31, 2015 and 2014, respectively, were outstanding and were excluded from the computation of diluted earnings per share because they would have been antidilutive. No restricted stock units were outstanding for the three months ended March 31, 2015 and 2014 that were excluded from the computation of diluted earnings per share as none were deemed antidilutive. Options to purchase 203,582 and 756,044 shares of our common stock for the nine months ended March 31, 2015 and 2014, respectively, were outstanding and were excluded from the computation of diluted earnings per share because they would have been antidilutive. In addition, 27,589 and zero restricted stock units for the nine months ended March 31, 2015 and 2014, respectively, were outstanding and excluded from the computation of diluted earnings per share as they also would have been antidilutive.