E-Z-GO 2011 Annual Report Download - page 80

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Note 10. Shareholders’ Equity
Capital Stock
We have authorization for 15 million shares of preferred stock with a par value of $0.01 and 500 million shares of common stock
with a par value of $0.125. Outstanding common stock activity for the three years ended December 31, 2011 is presented below:
(In thousands)
2011
2010
2009
Beginning balance
275,739
272,272
242,041
Exercise of stock options
177
336
10
Conversion of preferred stock to common stock
—
31
556
Issued to Textron Savings Plan
2,686
2,682
5,460
Common stock offering
—
—
23,805
Other issuances
271
418
400
Ending balance
278,873
275,739
272,272
Reserved Shares of Common Stock
At the end of 2011, common stock reserved for the conversion of convertible notes, the exercise of outstanding stock options and
warrants, and the issuance of shares upon vesting of outstanding restricted stock units totaled 62 million shares. See the
“Convertible Senior Notes and Related Transactions” section in Note 8 for information on our convertible debt.
Income per Common Share
We calculate basic and diluted earnings per share (EPS) based on net income, which approximates income available to common
shareholders for each period. Basic EPS is calculated using the two-class method, which includes the weighted-average number of
common shares outstanding during the period and restricted stock units to be paid in stock that are deemed participating securities
as they provide nonforfeitable rights to dividends. Diluted EPS considers the dilutive effect of all potential future common stock,
including stock options, restricted stock units and the shares that could be issued upon the conversion of our convertible notes, as
discussed below, and upon the exercise of the related warrants. The convertible note call options purchased in connection with the
issuance of the convertible notes are excluded from the calculation of diluted EPS as their impact is always anti-dilutive. Upon
conversion of our convertible notes, as described in Note 8, the principal amount would be settled in cash, and the excess of the
conversion value, as defined, over the principal amount may be settled in cash and/or shares of our common stock. Therefore,
only the shares of our common stock potentially issuable with respect to the excess of the notes’ conversion value over the
principal amount, if any, are considered as dilutive potential common shares for purposes of calculating diluted EPS.
The weighted-average shares outstanding for basic and diluted EPS are as follows:
(In thousands)
2011
2010
2009
Basic weighted-average shares outstanding
277,684
274,452
262,923
Dilutive effect of:
Convertible notes and warrants
28,869
27,450
—
Stock options and restricted stock units
702
653
—
Diluted weighted-average shares outstanding
307,255
302,555
262,923
In 2011 and 2010, stock options to purchase 5 million and 7 million shares, respectively, of common stock outstanding are
excluded from our calculation of diluted weighted-average shares outstanding as the exercise prices were greater than the average
market price of our common stock for those periods. These securities could potentially dilute EPS in the future. In 2009, the
potential dilutive effect of 8 million weighted-average shares of stock options, restricted stock units and the shares that could be
issued upon the conversion of our convertible notes and upon the exercise of the related warrants was excluded from the
computation of diluted weighted-average shares outstanding as the shares would have an anti-dilutive effect on the loss from
continuing operations.
69
Textron Inc. Annual Report • 2011 69