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Shares and Stockholders' Equity
12 Months Ended
Dec. 31, 2014
Shares and Stockholders' Equity [Abstract]  
Shares and Stockholders' Equity

 

 

14.  Shares and Stockholders’ Equity

 

Common and Preferred Shares

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

2014

 

2013

 

2012

 

Series A Preferred Stock

 

 

 

 

 

 

Balance as of beginning-of-year

 -

 

9,532

 

10,072

 

Conversion of convertible preferred stock (1)

 -

 

(5,818

)

(540

)

Redemption of convertible preferred stock

 -

 

(3,714

)

 -

 

Balance as of end-of-year

 -

 

 -

 

9,532

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

Balance as of beginning-of-year

262,896,701

 

271,402,586

 

291,319,222

 

Conversion of convertible preferred stock (1)

 -

 

93,088

 

8,640

 

Stock issued for exercise of warrants

4,356,385

 

1,981,856

 

 -

 

Stock compensation/issued for benefit plans

1,770,430

 

1,399,995

 

542,125

 

Retirement/cancellation of shares

(12,472,076

)

(11,980,824

)

(20,467,401

)

Balance as of end-of-year

256,551,440

 

262,896,701

 

271,402,586

 

 

 

 

 

 

 

 

Common Stock as of End-of-Year

 

 

 

 

 

 

Assuming conversion of preferred stock

256,551,440

 

262,896,701

 

271,555,098

 

Diluted basis

261,538,593

 

272,196,891

 

279,087,588

 

 

(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 earnings (loss) per common share was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

2014

 

2013

 

2012

 

Weighted-average shares, as used in basic calculation

260,877,533

 

265,631,377

 

280,648,391

 

Shares to cover exercise of outstanding warrants

4,342,860

 

9,884,307

 

10,150,212

 

Shares to cover conversion of preferred stock

 -

 

74,582

 

153,749

 

Shares to cover non-vested stock

1,522,737

 

1,491,483

 

1,153,178

 

Average stock options outstanding during the year

3,828,292

 

2,873,295

 

570,180

 

Assumed acquisition of shares with assumed proceeds

 

 

 

 

 

 

from exercising outstanding warrants

(894,175

)

(2,630,939

)

(4,685,901

)

Assumed acquisition of shares with assumed

 

 

 

 

 

 

proceeds and benefits from exercising stock

 

 

 

 

 

 

options (at average market price for the year)

(2,679,571

)

(2,036,098

)

(394,241

)

Shares repurchaseable from measured but

 

 

 

 

 

 

unrecognized stock option expense

(75,268

)

(139,131

)

(4,723

)

Average deferred compensation shares

1,041,587

 

 -

 

 -

 

Weighted-average shares, as used in diluted calculation

267,963,995

 

275,148,876

 

287,590,845

 

 

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.

 

For 2013 and 2012, the income used in the calculation of our diluted EPS was our net income (loss) reduced by preferred stock dividends.

 

As of December 31, 2014, we had 2,441,742 outstanding warrants.  The warrants, each representing the right to purchase one share of our common stock, no par value per share, had an exercise price of $10.45 as of December 31, 2014, subject to adjustment.  The warrants expire on July 10, 2019, and are listed on the New York Stock Exchange under the symbol “LNC WS.”

 

AOCI

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended December 31,

 

 

2014

 

2013

 

2012

 

Unrealized Gain (Loss) on AFS Securities

 

 

 

 

 

 

 

 

 

Balance as of beginning-of-year

$

1,609

 

$

4,066

 

$

2,947

 

Unrealized holding gains (losses) arising during the year

 

3,877

 

 

(5,728

)

 

2,691

 

Change in foreign currency exchange rate adjustment

 

(47

)

 

19

 

 

14

 

Change in DAC, VOBA, DSI, future contract benefits and other contract holder funds

 

(1,252

)

 

1,834

 

 

(1,233

)

Income tax benefit (expense)

 

(904

)

 

1,356

 

 

(480

)

Less:

 

 

 

 

 

 

 

 

 

Reclassification adjustment for gains (losses) included in net income (loss)

 

10

 

 

(67

)

 

(194

)

Associated amortization of DAC, VOBA, DSI and DFEL

 

(32

)

 

(29

)

 

(2

)

Income tax benefit (expense)

 

8

 

 

34

 

 

69

 

Balance as of end-of-year

$

3,297

 

$

1,609

 

$

4,066

 

Unrealized OTTI on AFS Securities

 

 

 

 

 

 

 

 

 

Balance as of beginning-of-year

$

(78

)

$

(107

)

$

(109

)

(Increases) attributable to:

 

 

 

 

 

 

 

 

 

Gross OTTI recognized in OCI during the year

 

(12

)

 

(11

)

 

(121

)

Change in DAC, VOBA, DSI and DFEL

 

2

 

 

1

 

 

15

 

Income tax benefit (expense)

 

4

 

 

4

 

 

36

 

Decreases attributable to:

 

 

 

 

 

 

 

 

 

Sales, maturities or other settlements of AFS securities

 

43

 

 

62

 

 

129

 

Change in DAC, VOBA, DSI and DFEL

 

(5

)

 

(8

)

 

(18

)

Income tax benefit (expense)

 

(12

)

 

(19

)

 

(39

)

Balance as of end-of-year

$

(58

)

$

(78

)

$

(107

)

Unrealized Gain (Loss) on Derivative Instruments

 

 

 

 

 

 

 

 

 

Balance as of beginning-of-year

$

256

 

$

163

 

$

119

 

Unrealized holding gains (losses) arising during the year

 

(250

)

 

143

 

 

55

 

Change in foreign currency exchange rate adjustment

 

50

 

 

(19

)

 

(12

)

Change in DAC, VOBA, DSI and DFEL

 

2

 

 

5

 

 

15

 

Income tax benefit (expense)

 

69

 

 

(45

)

 

(21

)

Less:

 

 

 

 

 

 

 

 

 

Reclassification adjustment for gains (losses) included in net income (loss)

 

(19

)

 

(15

)

 

(15

)

Associated amortization of DAC, VOBA, DSI and DFEL

 

1

 

 

1

 

 

4

 

Income tax benefit (expense)

 

6

 

 

5

 

 

4

 

Balance as of end-of-year

$

139

 

$

256

 

$

163

 

Foreign Currency Translation Adjustment

 

 

 

 

 

 

 

 

 

Balance as of beginning-of-year

$

(5

)

$

(4

)

$

1

 

Foreign currency translation adjustment arising during the year

 

2

 

 

(1

)

 

(5

)

Balance as of end-of-year

$

(3

)

$

(5

)

$

(4

)

Funded Status of Employee Benefit Plans

 

 

 

 

 

 

 

 

 

Balance as of beginning-of-year

$

(219

)

$

(310

)

$

(278

)

Adjustment arising during the year

 

(96

)

 

140

 

 

2

 

Income tax benefit (expense)

 

36

 

 

(49

)

 

(34

)

Balance as of end-of-year

$

(279

)

$

(219

)

$

(310

)

The following summarizes the reclassifications out of AOCI (in millions) and the associated line item in the Consolidated Statements of Comprehensive Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Years Ended

 

 

 

December 31,

 

 

 

2014

 

 

2013

 

 

Unrealized Gain (Loss) on AFS Securities

 

 

 

 

 

 

 

 

Gross reclassification

$

10

 

 

$

(67

)

Total realized gain (loss)

Associated amortization of DAC, 

 

 

 

 

 

 

 

 

VOBA, DSI and DFEL

 

(32

)

 

 

(29

)

Total realized gain (loss)

Reclassification before income

 

 

 

 

 

 

 

 

tax benefit (expense)

 

(22

)

 

 

(96

)

Income (loss) from continuing operations before taxes

Income tax benefit (expense)

 

8

 

 

 

34

 

Federal income tax expense (benefit)

Reclassification, net of income tax

$

(14

)

 

$

(62

)

Net income (loss)

 

 

 

 

 

 

 

 

 

Unrealized OTTI on AFS Securities

 

 

 

 

 

 

 

 

Gross reclassification

$

43

 

 

$

62

 

Total realized gain (loss)

Change in DAC, VOBA, DSI and DFEL

 

(5

)

 

 

(8

)

Total realized gain (loss)

Reclassification before income

 

 

 

 

 

 

 

 

tax benefit (expense)

 

38

 

 

 

54

 

Income (loss) from continuing operations before taxes

Income tax benefit (expense)

 

(12

)

 

 

(19

)

Federal income tax expense (benefit)

Reclassification, net of income tax

$

26

 

 

$

35

 

Net income (loss)

 

 

 

 

 

 

 

 

 

Unrealized Gain (Loss) on Derivative Instruments

 

 

 

 

 

 

Gross reclassifications:

 

 

 

 

 

 

 

 

Interest rate contracts

$

(22

)

 

$

(21

)

Net investment income

Interest rate contracts

 

3

 

 

 

3

 

Interest and debt expense

Foreign currency contracts

 

 -

 

 

 

3

 

Net investment income

Total gross reclassifications

 

(19

)

 

 

(15

)

 

Associated amortization of DAC,

 

 

 

 

 

 

 

 

VOBA, DSI and DFEL

 

1

 

 

 

1

 

Commissions and other expenses

Reclassifications before income

 

 

 

 

 

 

 

 

tax benefit (expense)

 

(18

)

 

 

(14

)

Income (loss) from continuing operations before taxes

Income tax benefit (expense)

 

6

 

 

 

5

 

Federal income tax expense (benefit)

Reclassification, net of income tax

$

(12

)

 

$

(9

)

Net income (loss)