Chesapeake Energy 2010 Annual Report Download - page 130

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2. Net Income Per Share
Accounting guidance for Earnings Per Share (EPS)requires presentation of “basic” and “diluted” earnings
per share on the face of the statements of operations for all entities with complex capital structures as well as a
reconciliation of the numerator and denominator of the basic and diluted EPS computations.
For the year ended December 31, 2010, all outstanding securities that are convertible into common stock
were included in the calculation of diluted EPS. For the years ended December 31, 2009 and 2008, the
following securities and associated adjustments to net income, comprised of dividends and loss on
conversions/exchanges, were not included in the calculation of diluted EPS, as the effects were antidilutive:
Net Income
Adjustments Shares
($ in millions) (in millions)
Year Ended December 31, 2009:
Common stock equivalent of our preferred stock outstanding:
4.50% cumulative convertible preferred stock ......................... $ 12 6
5.00% cumulative convertible preferred stock (series 2005B) ............ $ 10 5
Common stock equivalent of our preferred stock outstanding prior to
conversion:
6.25% mandatory convertible preferred stock ......................... $ 1 1
Unvested restricted stock ............................................. $ — 6
Outstanding stock options ............................................. $ — 1
Year Ended December 31, 2008:
Common stock equivalent of our preferred stock outstanding:
4.50% cumulative convertible preferred stock ......................... $ 12 6
5.00% cumulative convertible preferred stock (series 2005B) ............ $ 10 5
6.25% mandatory convertible preferred stock ......................... $ 2 1
Common stock equivalent of our preferred stock outstanding prior to
conversion:
4.50% cumulative convertible preferred stock ......................... $ 14 1
5.00% cumulative convertible preferred stock (series 2005B) ............ $ 62 4
As a result of the net loss to common stockholders for the year ended December 31, 2009, both basic
weighted average shares outstanding, which are used in computing basic EPS, and diluted weighted average
shares outstanding, which are used in computing diluted EPS, were 612 million shares. The basic and diluted
loss per common share was $9.57.
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