General Motors 2013 Annual Report Download - page 119

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 22. Earnings Per Share
Basic and diluted earnings per share are computed by dividing Net income attributable to common stockholders by the weighted-
average common shares outstanding in the period. Diluted earnings per share is computed by giving effect to all potentially dilutive
securities that are outstanding.
The following table summarizes basic and diluted earnings per share (in millions, except for per share amounts):
Years Ended December 31,
2013 2012 2011
Basic earnings per share
Net income attributable to stockholders ............................................... $ 5,346 $ 6,188 $ 9,190
Less: cumulative dividends on preferred stock and charge related to purchase of preferred
stock (a) ...................................................................... (1,576) (859) (859)
Less: undistributed earnings allocated to Series B Preferred Stock participating security ......... — (470) (746)
Net income attributable to common stockholders ........................................ $ 3,770 $ 4,859 $ 7,585
Weighted-average common shares outstanding — basic ................................ 1,393 1,566 1,536
Basic earnings per common share .................................................... $ 2.71 $ 3.10 $ 4.94
Diluted earnings per share
Net income attributable to stockholders ............................................... $ 5,346 $ 6,188 $ 9,190
Add: preferred dividends to holders of Series B Preferred Stock ............................ 218 — —
Less: cumulative dividends on preferred stock and charge related to purchase of preferred
stock (a) ...................................................................... (1,576) (859) (859)
Less: undistributed earnings allocated to Series B Preferred Stock participating security ......... — (442) (693)
Net income attributable to common stockholders ........................................ $ 3,988 $ 4,887 $ 7,638
Weighted-average common shares outstanding — diluted
Weighted-average common shares outstanding — basic .................................. 1,393 1,566 1,536
Dilutive effect of warrants .......................................................... 146 104 130
Dilutive effect of conversion of Series B Preferred Stock ................................. 134 — —
Dilutive effect of RSUs ............................................................352
Weighted-average common shares outstanding — diluted ................................. 1,676 1,675 1,668
Diluted earnings per common share .................................................. $ 2.38 $ 2.92 $ 4.58
(a) Includes earned but undeclared dividends of $15 million, $26 million and $26 million on our Series A Preferred Stock in the years ended
December 31, 2013, 2012 and 2011 and $20 million on our Series B Preferred Stock in the years ended December 31, 2012 and 2011.
Holders of the Series B Preferred Stock had a right to participate in our undistributed earnings because a dividend, if declared,
would result in a transfer of value to the holder through an adjustment to the fixed conversion ratios through various anti-dilution
provisions. Based on the nature of the Series B Preferred Stock and the nature of these anti-dilution provisions, we concluded that the
Series B Preferred Stock was a participating security and, as such, requires the application of the more dilutive of the two-class or if-
converted method to calculate earnings per share when the applicable market value of our common stock is below or above the range
of $33.00 to $39.60 per common share. For purposes of calculating earnings per share, the applicable market value is calculated as the
average of the closing prices of our common stock over the 40 consecutive trading day period ending on the third trading day
immediately preceding the date of our mandatory conversion in 2013 or the date of our financial statements for 2012 and 2011. The
calculation of the applicable market value is applied to the full year, irrespective of the applicable market value computed during the
prior quarters of the current year.
On the mandatory conversion date of our Series B Preferred Stock, December 1, 2013, the applicable market value of our common
stock was within the range of $33.00 to $39.60 per common share and, as such, we applied the if-converted method for purposes of
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