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Table of Contents
3. Earnings (Loss) Per Common Share
Basic earnings (loss) per common share ("EPS") is computed on the basis of the weighted average number of shares of common stock outstanding
during the period. Diluted EPS is computed on the basis of the weighted average number of shares of common stock plus the effect of potentially dilutive
shares of common stock outstanding during the period using the treasury stock method. Potentially dilutive shares include outstanding employee stock
options, employee stock appreciation rights ("SARs"), employee restricted stock units ("RSUs") and convertible debt. The following table presents the
computation of basic and diluted EPS (in millions, except share and per share amounts):
Year Ended December 31,
2011 2010 2009
Basic earnings (loss) per share:
Net income (loss) $ 71 $ 502 $ (205)
Weighted average common shares outstanding (in thousands) 162,028 161,412 133,000
Basic earnings (loss) per share $ 0.44 $ 3.11 $ (1.54)
Diluted earnings (loss) per share:
Net income (loss) 71 502 (205)
Interest expense on 7.25% convertible senior notes — 23 —
Net income (loss) for purposes of computing diluted earnings (loss) per share $ 71 $ 525 $ (205)
Share computation (in thousands):
Weighted average common shares outstanding 162,028 161,412 133,000
Dilutive effect of stock awards 1,715 1,973 —
Assumed conversion of 7.25% convertible senior notes — 37,746 —
Weighted average common shares outstanding as adjusted 163,743 201,131 133,000
Diluted earnings (loss) per share $ 0.44 $ 2.61 $ (1.54)
For the year ended December 31, 2011, 1,632,792 shares underlying stock options, SARs and RSUs were not included in the computation of diluted
EPS because inclusion of such shares would be antidilutive. In addition, 37,746,174 and 199,379 incremental shares, respectively, from the assumed
conversion of the 7.25% Convertible Senior Notes (the "7.25% notes") and the 7% Senior Convertible Notes (the "7% notes") were excluded from the
computation of diluted EPS because inclusion of such shares would be antidilutive.
For the year ended December 31, 2010, 1,803,093 shares underlying stock options, SARs and RSUs were not included in the computation of diluted
EPS because inclusion of such shares would be antidilutive. In addition, 2,328,787 incremental shares from the assumed conversion of the 7% notes were
excluded from the computation of diluted EPS because inclusion of such shares would be antidilutive.
For the year ended December 31, 2009, 4,806,237 shares underlying stock options, SARs and RSUs were not included in the computation of diluted
EPS because inclusion of such shares would be antidilutive. In addition, 23,954,303 and 3,048,914 incremental shares, respectively, from the assumed
conversion of the 7.25% notes and the 7% notes were excluded from the computation of diluted EPS because inclusion of such shares would be antidilutive.
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