15. Earnings Per Share

In conjunction with the Spin-Off, NOV distributed to its stockholders all 107,053,031 shares of common stock of NOW Inc. after the market closed on May 30, 2014. Each NOV stockholder received one share of NOW common stock for every four shares of NOV common stock held at the close of business on the record date of May 22, 2014 and not sold prior to close of business May 30, 2014. On June 2, 2014, NOW Inc. stock began trading the “regular-way” on the New York Stock Exchange under the symbol “DNOW”.

Basic earnings per share is based on net income attributable to the Company’s earnings and is calculated based upon the daily weighted-average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested stock and unit awards that have not yet been issued as common stock. Diluted EPS includes the above, plus unvested stock, unit or option awards granted and vested unexercised stock options, but only to the extent these instruments dilute earnings per share.

For comparative purposes, and to provide a more meaningful calculation of weighted-average shares outstanding, the Company has assumed the 107,053,031 shares of common stock of NOW Inc. that was distributed on May 30, 2014 to be outstanding as of the beginning of each period prior to the Spin-Off presented in the calculation of weighted-average shares. In addition, the Company has assumed the dilutive securities outstanding at May 30, 2014, were also outstanding for each of the periods prior to the Spin-Off presented.

For the year ended December 31, 2014, 2,552,292 stock options, RSAs and RSUs were excluded from the computation of diluted earnings per share due to their antidilutive effect.


	Year Ended December 31,
(In millions, except share data)	2014			2013		2012
Numerator for basic and diluted net income per share attributable to the Company’s stockholders:
Net income attributable to the Company	$	116		$	147	$	108
Less: net income attributable to nonvested shares		(1	)		—		—

Net income attributable to the Company’s stockholders	$	115		$	147	$	108

Denominator for basic net income per share attribtable to the Company’s stockholders:
Weighted average common shares outstanding		107,058,843			107,053,031		107,053,031
Effect of dilutive securities: Dilutive effect of stock based compensation		497,301			415,837		415,837

Denominator for diluted net income per share attributable to the Company’s stockholders:		107,556,144			107,468,868		107,468,868

Earnings per share attributable to the Company’s stockholders:
Basic	$	1.07		$	1.37	$	1.01

Diluted	$	1.06		$	1.36	$	1.00

ASC Topic 260, “Earnings Per Share” (“ASC Topic 260”) requires companies with unvested participating securities to utilize a two-class method for the computation of net income attributable to the Company per share. The two-class method requires a portion of net income attributable to the Company to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents, if declared. Net income attributable to the Company allocated to these participating securities was approximately $1 million, $0 million, and $0 million for the years ended December 31, 2014, 2013 and 2012, respectively, and therefore excluded from net income attributable to the Company per share calculation.