Financial Information
5. EARNINGS PER SHARE
The table below illustrates the reconciliation of the earnings and number of shares used in our calculations of basic and diluted earnings per share:
We compute the effect of dilutive securities using the treasury stock method and average market prices during the period. We determine dilution based on earnings.
Pursuant to the applicable accounting guidance for calculating earnings per share, we have not included the following stock options and SARs in our calculation of diluted earnings per share because their exercise prices were greater than the average market prices for the applicable periods:
(a) for 2012, 1.0 million options and SARs;
(b) for 2011, 4.1 million options and SARs; and
(c) for 2010, 2.4 million options and SARs.