Shares and Stockholders' Equity

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements [Abstract]

Shares and Stockholders' Equity

10. Shares and Stockholders' Equity

Common and Preferred Shares

The changes in our preferred and common stock (number of shares) were as follows:

		For the Three		For the Nine
		Months Ended		Months Ended
		September 30,		September 30,
		2012	2011	2012	2011
Series A Preferred Stock
Balance as of beginning-of-period		9,632	10,854	10,072	10,914
Conversion of convertible preferred stock (1)		(100)	-	(540)	(60)
	Balance as of end-of-period	9,532	10,854	9,532	10,854
Common Stock
Balance as of beginning-of-period		279,168,971	308,339,163	291,319,222	315,718,554
Conversion of convertible preferred stock (1)		1,600	-	8,640	960
Stock compensation/issued for benefit plans		60,238	32,712	394,633	215,618
Retirement/cancellation of shares		(4,157,191)	(6,712,700)	(16,648,877)	(14,275,957)
	Balance as of end-of-period	275,073,618	301,659,175	275,073,618	301,659,175
Common Stock as of End-of-Period
Assuming conversion of preferred stock		275,226,130	301,832,839	275,226,130	301,832,839
Diluted basis		282,361,186	306,899,902	282,361,186	306,899,902

(1)        Represents the conversion of Series A preferred stock into common stock.

Our common and Series A preferred stocks are without par value.

Average Shares

A reconciliation of the denominator (number of shares) in the calculations of basic and diluted EPS was as follows:

			For the Three		For the Nine
			Months Ended		Months Ended
			September 30,		September 30,
			2012	2011	2012	2011
Weighted-average shares, as used in basic calculation			277,883,878	304,779,641	282,989,766	310,357,508
Shares to cover exercise of outstanding warrants			10,150,192	10,150,292	10,150,218	10,150,292
Shares to cover conversion of preferred stock			153,886	173,664	154,165	174,293
Shares to cover non-vested stock			1,141,821	815,594	1,087,724	801,261
Average stock options outstanding during the period			513,722	500,578	540,976	698,054
Assumed acquisition of shares with assumed
	proceeds from exercising outstanding warrants		(4,840,576)	(5,153,660)	(4,787,407)	(4,223,290)
Assumed acquisition of shares with assumed
	proceeds and benefits from exercising stock
	options (at average market price for the period)		(352,501)	(342,848)	(371,115)	(459,168)
Shares repurchaseable from measured but
	unrecognized stock option expense		(210)	(31,025)	(5,553)	(80,317)
Average deferred compensation shares			-	1,105,447	-	1,070,549
		Weighted-average shares, as used in diluted calculation	284,650,212	311,997,683	289,758,774	318,489,182

In the event the average market price of LNC common stock exceeds the issue price of stock options and the options have a dilutive effect to our EPS, such options will be shown in the table above.

The income used in the calculation of our diluted EPS is our net income (loss), reduced by preferred stock dividends and accretion of discount. These amounts are presented on our Consolidated Statements of Comprehensive Income (Loss).

Accumulated OCI

The following summarizes the components and changes in accumulated OCI (in millions):

				For the Nine
				Months Ended
				September 30,
				2012		2011
Unrealized Gain (Loss) on AFS Securities
Balance as of beginning-of-year				$	2,947	$	1,072
	Cumulative effect from adoption of new accounting standards				-		105
	Unrealized holding gains (losses) arising during the period				2,804		3,232
	Change in foreign currency exchange rate adjustment				9		2
	Change in DAC, VOBA, DSI and other contract holder funds				(724)		(791)
	Income tax benefit (expense)				(779)		(837)
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss)			(148)		(83)
		Associated amortization of DAC, VOBA, DSI and DFEL			1		(10)
		Income tax benefit (expense)			51		33
			Balance as of end-of-period	$	4,353	$	2,843
Unrealized OTTI on AFS Securities
Balance as of beginning-of-year				$	(110)	$	(129)
	(Increases) attributable to:
		Cumulative effect from adoption of new accounting standards			-		(5)
		Gross OTTI recognized in OCI during the period			(96)		(48)
		Change in DAC, VOBA, DSI and DFEL			14		11
		Income tax benefit (expense)			31		13
	Decreases attributable to:
		Sales, maturities or other settlements of AFS securities			112		91
		Change in DAC, VOBA, DSI and DFEL			(14)		(18)
		Income tax benefit (expense)			(35)		(25)
			Balance as of end-of-period	$	(98)	$	(110)
Unrealized Gain (Loss) on Derivative Instruments
Balance as of beginning-of-year				$	119	$	(15)
	Cumulative effect from adoption of new accounting standards				-		4
	Unrealized holding gains (losses) arising during the period				67		188
	Change in foreign currency exchange rate adjustment				(7)		(1)
	Change in DAC, VOBA, DSI and DFEL				9		(1)
	Transfers from derivative instruments to bonds through basis adjustment				13		-
	Income tax benefit (expense)				(30)		(65)
	Less:
		Reclassification adjustment for gains (losses) included in net income (loss)			(11)		(3)
		Associated amortization of DAC, VOBA, DSI and DFEL			2		-
		Income tax benefit (expense)			3		1
			Balance as of end-of-period	$	177	$	112
Foreign Currency Translation Adjustment
Balance as of beginning-of-year				$	1	$	1
	Foreign currency translation adjustment arising during the period				(6)		3
	Income tax benefit (expense)				2		(1)
		Balance as of end-of-period		$	(3)	$	3
Funded Status of Employee Benefit Plans
Balance as of beginning-of-year				$	(278)	$	(181)
	Adjustment arising during the period				(2)		(3)
	Income tax benefit (expense)				1		1
		Balance as of end-of-period		$	(279)	$	(183)