COPT Defense Properties Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Earnings Per Share ("EPS")

Earnings Per Share ("EPS")

6 Months Ended

Jun. 30, 2023

We present both basic and diluted EPS. We compute basic EPS by dividing net income available to common shareholders allocable to unrestricted common shares under the two-class method by the weighted average number of unrestricted common shares outstanding during the period. Our computation of diluted EPS is similar except that:

•the denominator is increased to include: (1) the weighted average number of potential additional common shares that would have been outstanding if securities that are convertible into common shares were converted; and (2) the effect of dilutive potential common shares outstanding during the period attributable to redeemable noncontrolling interests and share-based compensation awards using the if-converted or treasury stock methods; and

•the numerator is adjusted to add back any changes in income or loss that would result from the assumed conversion into common shares that we add to the denominator.

Summaries of the numerator and denominator for purposes of basic and diluted EPS calculations are set forth below (in thousands, except per share data):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Income from continuing operations	$	31,642	$	33,595	$	112,040	$	64,846
Income from continuing operations attributable to noncontrolling interests	(1,355)		(1,285)		(2,974)		(2,369)
Income from continuing operations attributable to share-based compensation awards for basic EPS	(115)		(92)		(413)		(204)
Numerator for basic EPS from continuing operations attributable to common shareholders	30,172		32,218		108,653		62,273

Redeemable noncontrolling interests	(51)		(30)		(115)		(69)


Adjustment to income from continuing operations attributable to share-based compensation awards for diluted EPS	17		17		64		35
Numerator for diluted EPS from continuing operations attributable to common shareholders	30,138		32,205		108,602		62,239
Discontinued operations	—		—		—		29,573
Discontinued operations attributable to noncontrolling interests	—		—		—		(421)
Income from discontinued operations attributable to share-based compensation awards for diluted EPS	—		—		—		(90)
Numerator for diluted EPS on net income attributable to common shareholders	$	30,138	$	32,205	$	108,602	$	91,301

Denominator (all weighted averages):
Denominator for basic EPS (common shares)	112,188		112,082		112,157		112,052


Dilutive effect of redeemable noncontrolling interests	62		126		77		129
Dilutive effect of share-based compensation awards	426		429		418		427
Denominator for diluted EPS (common shares)	112,676		112,637		112,652		112,608

Basic EPS attributable to common shareholders:
Income from continuing operations	$	0.27	$	0.29	$	0.97	$	0.55
Discontinued operations	—		—		—		0.26
Net income	$	0.27	$	0.29	$	0.97	$	0.81
Diluted EPS attributable to common shareholders:
Income from continuing operations	$	0.27	$	0.29	$	0.96	$	0.55
Discontinued operations	—		—		—		0.26
Net income	$	0.27	$	0.29	$	0.96	$	0.81

Our diluted EPS computations do not include the effects of the following securities since the conversions of such securities would increase diluted EPS for the respective periods (in thousands):


	Weighted Average Shares Excluded from Denominator
	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2023	2022	2023	2022
Conversion of common units	1,514	1,476	1,502	1,430
Conversion of redeemable noncontrolling interests	934	863	953	835

The following securities were also excluded from the computation of diluted EPS because their effect was antidilutive:

•weighted average restricted shares and deferred share awards for the three months ended June 30, 2023 and 2022 of 412,000 and 404,000, respectively, and for the six months ended June 30, 2023 and 2022 of 405,000 and 401,000, respectively;

•weighted average TB-PIUs for the three months ended June 30, 2023 and 2022 of 170,000 and 191,000, respectively, and for the six months ended June 30, 2023 and 2022 of 176,000 and 182,000, respectively; and

•weighted average vested PIUs for the three and six months ended June 30, 2023 of 170,000 and 137,000, respectively.