Avon 2011 Annual Report Download - page 71

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Earnings per Share
We compute earnings per share (“EPS”) using the two-class method, which is an earnings allocation formula that determines earnings per
share for common stock and participating securities. Our participating securities are our grants of restricted stock and restricted stock units,
which contain non-forfeitable rights to dividend equivalents. We compute basic EPS by dividing net income allocated to common
shareholders by the weighted-average number of shares outstanding during the year. Diluted EPS is calculated to give effect to all potentially
dilutive common shares that were outstanding during the year.
For each of the three years ended December 31, the components of basic and diluted EPS were as follows:
(Shares in millions) 2011 2010 2009
Numerator from continuing operations
Income from continuing operations less amounts attributable to
noncontrolling interests $522.2 $590.9 $616.9
Less: Earnings allocated to participating securities (4.6) (4.8) (5.2)
Income from continuing operations allocated to common shareholders 517.6 586.1 611.7
Numerator from discontinued operations
(Loss) income from discontinued operations plus/less amounts
attributable to noncontrolling interests $ (8.6) $ 15.4 $ 8.9
Less: Earnings allocated to participating securities (.9) (.4) .1
(Loss) income allocated to common shareholders (9.5) 15.0 9.0
Numerator attributable to Avon
Income attributable to Avon less amounts attributable to
noncontrolling interests $513.6 $606.3 $625.8
Less: Earnings allocated to participating securities (5.5) (5.2) (5.1)
Income allocated to common shareholders 508.1 601.1 620.7
Denominator:
Basic EPS weighted-average shares outstanding 430.5 428.8 426.9
Diluted effect of assumed conversion of stock options 1.6 2.6 1.6
Diluted EPS adjusted weighted-average shares outstanding 432.1 431.4 428.5
Earnings per Common Share from continuing operations:
Basic $ 1.20 $ 1.37 $ 1.43
Diluted $ 1.20 $ 1.36 $ 1.43
(Loss) Earnings per Common Share from discontinued operations:
Basic $ (.02) $ .04 $ .02
Diluted $ (.02) $ .03 $ .02
Earnings per Common Share attributable to Avon:
Basic $ 1.18 $ 1.40 $ 1.45
Diluted $ 1.18 $ 1.39 $ 1.45
We did not include stock options to purchase 22.9 million shares for the year ended December 31, 2011, 18.5 million shares for 2010, and
16.8 million shares for 2009 of Avon common stock in the calculations of diluted EPS because the exercise prices of those options were
greater than the average market price and their inclusion would be anti-dilutive.
A V O N 2011 F-11