Callaway 2014 Annual Report Download - page 88

F-20
Note 5. Preferred Stock
In August 2012, the Company exchanged 982,361 shares of its outstanding 7.50% Series B Cumulative Perpetual
Convertible Preferred Stock, $0.01 par value (the “preferred stock”) for 5,866,821 shares of common stock and $63,227,000
in convertible notes in separate, privately negotiated transactions (see Note 4). After the exchange, the Company had 417,639
remaining shares of preferred stock outstanding.
In August 2013, the Company exchanged 233,843 shares of its outstanding preferred stock for 3,316,922 shares of the
Company's common stock at the stated conversion rate of 14.1844 plus an additional 75,342 common shares as an inducement.
The Company also paid the exchanging holders cash dividends through December 15, 2013 on their shares of preferred stock
surrendered in the exchange. During the fourth quarter of 2013, the Company issued a notice of redemption and holders of
183,496 shares of preferred stock converted their holdings into 2,602,770 shares of the Company's common stock at the stated
conversion rate of 14.1844. The Company redeemed the remaining 300 shares for $30,000. As of December 31, 2014 and
2013, there were no outstanding shares of the Company's Series B Cumulative Perpetual Convertible Preferred Stock.
Note 6. Earnings (Loss) per Common Share
Earnings (loss) per common share—basic, is computed by dividing net income allocable to common shareholders
(net income less preferred stock dividends) by the weighted-average number of common shares outstanding for the period.
Earnings (loss) per common share—diluted, is computed by dividing net income allocable to common shareholders by
the weighted-average number of common shares—diluted. Dilutive securities are included in the calculation of diluted earnings
per common share using the treasury stock method and the if-converted method in accordance with ASC Topic 260, “Earnings
per Share.” Dilutive securities include the common stock equivalents of convertible preferred stock and convertible notes,
options granted pursuant to the Company’s stock option plans and outstanding restricted stock units and performance share
units granted to employees and non-employee directors (see Note 15). There were no outstanding shares of the preferred stock
at December 31, 2014 and 2013 (see Note 5).
Weighted-average common shares outstanding—diluted is the same as weighted-average common shares outstanding
—basic in periods when a net loss is reported or in periods when diluted earnings per share is higher than basic earnings
per share.
The following table summarizes the computation of basic and diluted earnings (loss) per share:
Years Ended December 31,
2014 2013 2012
(In thousands, except per share data)
Earnings (loss) per common share—basic
Net income (loss) ................................................................................................. $ 16,008 $ (18,921)$
(122,946)
Less: Preferred stock dividends ........................................................................... — 3,332 8,447
Net income (loss) allocable to common shareholders ......................................... $ 16,008 $ (22,253)$
(131,393)
Weighted-average common shares outstanding—basic....................................... 77,559 72,809 67,061
Basic earnings (loss) per common share.............................................................. $ 0.21 $ (0.31)$ (1.96)
Earnings (loss) per common share—diluted
Net income (loss) ................................................................................................. $ 16,008 $ (18,921)$
(122,946)
Less: Preferred stock dividends ........................................................................... — 3,332 8,447
Net income (loss) allocable to common shareholders ......................................... $ 16,008 $ (22,253)$
(131,393)
Weighted-average common shares outstanding—basic....................................... 77,559 72,809 67,061
Options and restricted stock............................................................................ 826 — —
Weighted-average common shares outstanding—diluted.................................... 78,385 72,809 67,061
Dilutive earnings (loss) per common share ......................................................... $ 0.20 $ (0.31)$ (1.96)
Earnings (loss) per share—diluted, reflects the potential dilution that could occur if convertible securities, or other
contracts to issue common stock, were exercised or converted into common stock. Options with an exercise price in excess