National Oilwell Varco 2011 Annual Report Download - page 76

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Index to Financial Statements
Net Income Attributable to Company Per Share
The following table sets forth the computation of weighted average basic and diluted shares outstanding (in millions, except per share data):
Years Ended December 31,
2011 2010 2009
Numerator:
Net income attributable to Company $ 1,994 $ 1,667 $ 1,469
Denominator:
Basicweighted average common shares outstanding 422 417 416
Dilutive effect of employee stock options and other unvested stock awards 2 2 1
Diluted outstanding shares 424 419 417
Basic earnings attributable to Company per share $ 4.73 $ 3.99 $ 3.53
Diluted earnings attributable to Company per share $ 4.70 $ 3.98 $ 3.52
Cash dividends per share $ 0.45 $ 0.41 $ 1.10
ASC Topic 260, Earnings Per Share (ASC Topic 260) requires companies with unvested participating securities to utilize a two-class method for the computation of net
income attributable to Company per share. The two-class method requires a portion of net income attributable to Company to be allocated to participating securities, which are
unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Net income attributable to Company allocated
to these participating securities was immaterial for the years ended December 31, 2011, 2010 and 2009 and therefore not excluded from Net income attributable to Company
per share calculation.
The Company had stock options outstanding that were anti-dilutive totaling 3 million, 8 million, and 4 million at December 31, 2011, 2010 and 2009, respectively.
Recently Issued Accounting Standards
In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair
Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (ASU No. 2011-04), which provides guidance about how fair value should be applied where
it is already required or permitted under U.S. GAAP. The ASU does not extend the use of fair value or require additional fair value measurements, but rather provides
explanations about how to measure fair value. ASU No. 2011-04 requires prospective application and will be effective for interim and annual reporting periods beginning after
December 15, 2011. The Company is currently assessing the impact ASU No. 2011-04 will have on its financial statements, but does not expect a significant impact from
adoption of the pronouncement.
In June 2011, the FASB issued ASU No. 2011-05 Presentation of Comprehensive Income (ASU No. 2011-05), which eliminates the option to present components of
other comprehensive income as part of the statement of changes in equity and requires that all nonowner changes in equity be presented either in a single continuous statement
of comprehensive income or in two separate but consecutive statements. ASU No. 2011-05 requires retrospective application. The Company early adopted ASU No. 2011-05
and added the Consolidated Statements of Comprehensive Income retrospectively for all reporting periods presented.
In September 2011, the FASB issued ASU No. 2011-8 IntangiblesGoodwill and Other (ASU No. 2011-08), which amends its guidance on the testing of goodwill for
impairment allowing entities to perform a qualitative assessment on goodwill impairment to determine whether it is more likely than not (defined as having a likelihood of
more than 50 percent) that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill
impairment test. This guidance is effective for goodwill impairment tests performed in interim and annual periods for fiscal years beginning after December 15, 2011, with
early adoption permitted. The Company is currently assessing the impact ASU No. 2011-08 will have on its financial statements, but does not expect a significant impact from
adoption of the pronouncement.
In December 2011, the FASB issued ASU No. 2011-11 Balance SheetDisclosures about Offsetting Assets and Liabilities (ASU No. 2011-11), which requires an entity
to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities
borrowing/lending arrangements, and derivative instruments that are eligible for offset in the statement of financial position and/or subject to a master netting arrangement or
similar agreement. ASU No. 2011-11 is effective for annual and interim periods beginning on January 1, 2013. The Company is currently assessing the impact ASU
No. 2011-11 will have on its financial statements, but does not expect a significant impact from adoption of the pronouncement.
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