Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Note 21: Earnings Per Share |
top |
We computed our basic and diluted earnings per common share as follows:
| (In Millions, Except Per Share Amounts) | 2008 | 2007 | 2006 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Net income | $ | 5,292 | $ | 6,976 | $ | 5,044 | |||
| Weighted average common shares outstanding—basic | 5,663 | 5,816 | 5,797 | ||||||
| Dilutive effect of employee equity incentive plans | 34 | 69 | 32 | ||||||
| Dilutive effect of convertible debt | 51 | 51 | 51 | ||||||
| Weighted average common shares outstanding—diluted | 5,748 | 5,936 | 5,880 | ||||||
| Basic earnings per common share | $ | 0.93 | $ | 1.20 | $ | 0.87 | |||
| Diluted earnings per common share | $ | 0.92 | $ | 1.18 | $ | 0.86 | |||
We computed our basic earnings per common share using net income and the weighted average number of common shares outstanding during the period. We computed diluted earnings per common share using net income and the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period. Potentially dilutive common shares are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding restricted stock units, and the assumed issuance of common stock under the stock purchase plan, and applying the if-converted method for the assumed conversion of debt.
For 2008, we excluded 484 million outstanding weighted average stock options (417 million in 2007 and 693 million in 2006) from the calculation of diluted earnings per common share because the exercise prices of these stock options were greater than or equal to the average market value of the common shares. These options could be included in the calculation in the future if the average market value of the common shares increases and is greater than the exercise price of these options.