Notes to Financial Statements


Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, stock awards, and shared performance stock awards. The components of basic and diluted EPS are as follows:


(In millions, except earnings per share)             

Three Months Ended September 30,    2011     2010  

Net income available for common shareholders (A)

   $   5,738      $   5,410   

Weighted average outstanding shares of common stock (B)

     8,392        8,614   

Dilutive effect of stock-based awards

     98        81   


Common stock and common stock equivalents (C)

     8,490        8,695   


Earnings Per Share


Basic (A/B)

   $ 0.68      $ 0.63   

Diluted (A/C)

   $ 0.68      $ 0.62   

We excluded the following shares underlying stock-based awards from the calculations of diluted EPS because their inclusion would have been anti-dilutive:


(In millions)             

Three Months Ended September 30,    2011     2010  

Shares excluded from calculations of diluted EPS

     8        104   

The decrease in anti-dilutive shares from the comparable period was due mainly to the decrease in employee stock options outstanding.

In June 2010, we issued $1.25 billion of zero-coupon debt securities that are convertible into shares of our common stock if certain conditions are met. As of September 30, 2011, none of these securities had met price or other conditions that would make them eligible for issuance and therefore were excluded from the calculation of either the basic or diluted EPS. See Note 10 – Debt for additional information.