Earnings Per Share

3 Months Ended

Mar. 31, 2012

Earnings Per Share

Earnings Per Share

Note 3.  Earnings Per Share

Basic earnings per share are calculated under the two-class method, which allocates earnings to each class of stock based on its dividend rights.  Class B shares are convertible into Class A shares at a conversion ratio of 2,400 to 1.  During the three months ended March 31, 2012, two shares of Class B common stock were converted into 4,800 shares of Class A common stock.  See Note 15, “Capital Stock”.  Class A diluted earnings per share are calculated under the if-converted method, which reflects the conversion of Class B shares and the effect of potentially dilutive outstanding employee stock-based awards and awards vested and not yet vested related to the outside directors’ stock compensation plan.

A reconciliation of the numerators and denominators used in the basic and diluted per-share computations is presented as follows for each class of Indemnity common stock:

	Indemnity Shareholder Interest
(dollars in millions,	Three months ended March 31,
except per share data)	2012			2011
	Allocated	Weighted	Per-	Allocated	Weighted	Per-
	net income	shares	share	net income	shares	share
	(numerator)	(denominator)	amount	(numerator)	(denominator)	amount
Class A – Basic EPS:
Income available to Class A stockholders	$36	47,749,799	$    0.76	$44	49,789,056	$    0.88
Dilutive effect of stock-based awards	0	72,245	–	0	69,382	–
Assumed conversion of Class B shares	0	6,108,000	–	0	6,110,400	–
Class A – Diluted EPS:
Income available to Class A stockholders on Class A equivalent shares	$36	53,930,044	$    0.67	$44	55,968,838	$    0.78
Class B – Basic and diluted EPS:
Income available to Class B stockholders	$  0	2,545	$113.56	$  0	2,546	$126.48