AIG 2013 Annual Report Download - page 324

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.
In connection with the issuance of the Series C Preferred Stock, we applied the two-class method for calculating
EPS. The two-class method is an earnings allocation method for computing EPS when a company’s capital structure
includes either two or more classes of common stock or common stock and participating securities. This method
determines EPS based on dividends declared on common stock and participating securities (i.e., distributed
earnings), as well as participation rights of participating securities in any undistributed earnings. The Series C
Preferred Stock was retired as part of the Recapitalization on January 14, 2011. Subsequent to January 14, 2011,
we have not had any outstanding participating securities that would subject us to the two-class method.
The following table presents the computation of basic and diluted EPS:
Numerator for EPS:
Income from continuing operations $ 3,699 $ 18,863
Less: Net income from continuing operations attributable to
noncontrolling interests:
Nonvoting, callable, junior and senior preferred interests 208 634
Other 54 55
Total net income from continuing operations attributable to
noncontrolling interests 262 689
Deemed dividends to AIG Series E and F Preferred Stock – (812)
Income attributable to AIG common shareholders from
continuing operations 3,437 17,362
Income from discontinued operations 1 2,467
Less: Net income from discontinued operations attributable to
noncontrolling interests –19
Income attributable to AIG common shareholders from
discontinued operations 1 2,448
Net income attributable to AIG common shareholders $ 3,438 $ 19,810
Denominator for EPS:
Weighted average shares outstanding – basic 1,687,197,038 1,799,385,757
Dilutive shares 29,603 72,740
Weighted average shares outstanding – diluted*1,687,226,641 1,799,458,497
Income per common share attributable to AIG:
Basic:
Income from continuing operations $ 2.04 $ 9.65
Income from discontinued operations $ – $ 1.36
Net Income attributable to AIG $ 2.04 $ 11.01
Diluted:
Income from continuing operations $ 2.04 $ 9.65
Income from discontinued operations $ – $ 1.36
Net Income attributable to AIG $ 2.04 $ 11.01
* Dilutive shares are calculated using the treasury stock method and include dilutive shares from share-based employee compensation plans, a
weighted average portion of the warrants issued to AIG shareholders as part of the recapitalization in January 2011 and a weighted average portion
of the warrants issued to the Department of the Treasury in 2009 that we repurchased in the first quarter of 2013. The number of shares excluded
from diluted shares outstanding were 38 million, 78 million and 76 million for the years ended December 31, 2013, 2012 and 2011, respectively,
because the effect of including those shares in the calculation would have been anti-dilutive.
Deemed dividends resulted from the Recapitalization and represent the excess of:
• the fair value of the consideration transferred to the Department of the Treasury, which consisted of 1,092,169,866
shares of AIG Common Stock, $20.2 billion of AIA SPV Preferred Interests and ALICO SPV Preferred Interests,
and a liability for a commitment by us to pay the Department of the Treasury’s costs to dispose of all of its shares,
over
• the carrying value of the Series E Preferred Stock and Series F Preferred Stock.
18. EARNINGS PER SHARE (EPS)
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AIG 2013 Form 10-K306
ITEM 8 / NOTE 18. EARNINGS PER SHARE (EPS)
Years Ended December 31,
(dollars in millions, except per share data) 2013 2012 2011
$ 9,008
–
7
7
–
9,001
84
–
84
$ 9,085
1,474,171,690
7,035,107
1,481,206,797
$ 6.11
$ 0.05
$ 6.16
$ 6.08
$ 0.05
$ 6.13
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