AIG 2014 Annual Report Download - page 316

ITEM 8 / NOTE 18. NONCONTROLLING INTERESTS
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299
As a result of the closing of the Recapitalization on January 14, 2011, the SPV Preferred Interests held by the Department of
the Treasury were no longer considered permanent equity on our Consolidated Balance Sheets, and were classified as
redeemable noncontrolling interests. As part of the Recapitalization, we used approximately $6.1 billion of the cash proceeds
from the sale of ALICO to pay down a portion of the liquidation preference of the SPV Preferred Interests. The liquidation
preference of the SPV Preferred Interests was further reduced by approximately $12.4 billion using proceeds from the sale of
AIG Star, AIG Edison, Nan Shan, and MetLife securities received in the sale of ALICO. During the first quarter of 2011, the
remaining liquidation preference of the ALICO SPV Preferred Interests was paid in full.
The SPV Preferred Interests were measured at fair value on their issuance date. The SPV Preferred Interests initially had a
liquidation preference of $25 billion and had a preferred return of five percent per year compounded quarterly through
September 22, 2013 and nine percent thereafter. The preferred return is reflected in Net income from continuing operations
attributable to noncontrolling interests - Nonvoting, callable, junior and senior preferred interests in the Consolidated
Statements of Income. The difference between the SPV Preferred Interests’ fair value and the initial liquidation preference was
amortized and included in Net income from continuing operations attributable to noncontrolling interests - Nonvoting, callable,
junior and senior preferred interests.
During the first quarter of 2012, the liquidation preference of the AIA SPV Preferred Interests was paid down in full.
Non-redeemable noncontrolling interests
Non-redeemable noncontrolling interests include the equity interests of third-party shareholders in our consolidated
subsidiaries and includes the preferred shareholders’ equity in outstanding preferred stock of ILFC, a wholly-owned subsidiary
that was held for sale at December 31, 2013 and 2012. The preferred stock in ILFC consisted of 1,000 shares of market
auction preferred stock (MAPS) in two series (Series A and B) of 500 shares each. Each of the MAPS shares had a liquidation
value of $100,000 per share and was not convertible. Dividends on the MAPS were accounted for as a reduction of the
noncontrolling interest. The dividend rate, other than the initial rate, for each dividend period for each series was reset
approximately every seven weeks (49 days) on the basis of orders placed in an auction, provided such auctions were able to
occur. The MAPS were transferred as part of the sale of ILFC.
On May 14, 2014, we completed the sale of International Lease Finance Corporation (ILFC) to AerCap Ireland Limited, a
wholly owned subsidiary of AerCap Holdings N.V. (AerCap). See Note 4 – Held-For-Sale Classification and Discontinued
Operations for further discussion.
For the years ended December 31, 2014 and 2013, the Noncontrolling interests balance declined by $237 million and
$56 million, respectively, primarily caused by distributions to noncontrolling interest.
19. EARNINGS PER SHARE (EPS)
The basic EPS computation is based on the weighted average number of common shares outstanding, adjusted to reflect all
stock dividends and stock splits. The diluted EPS computation is based on those shares used in the basic EPS computation
plus shares that would have been outstanding assuming issuance of common shares for all dilutive potential common shares
outstanding and adjusted to reflect all stock dividends and stock splits.
The following table presents the computation of basic and diluted EPS:
Years Ended December 31,
(dollars in millions, except per share data) 2014 2013 2012
Numerator for EPS:
Income from continuing operations $7,574 $ 9,008 $ 3,699
Less: Net income (loss) from continuing operations attributable to noncontrolling
interests:
Nonvoting, callable, junior and senior preferred interests - - 208
Other (5) 754
Total net income (loss) from continuing operations attributable to noncontrolling
interests (5) 7 262