Earnings per share:


Notes to Financial Statements

NOTE 2    EARNINGS PER SHARE

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share 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 earnings per share are as follows:

 

(In millions, except earnings per share)   

Three Months Ended

December 31,

   

Six Months Ended

December 31,

 


     2010     2009     2010     2009  

Net income available for common shareholders (A)

   $   6,634      $   6,662      $   12,044      $   10,236   

Weighted average shares of common stock (B)

     8,497        8,856        8,555        8,885   

Dilutive effect of stock-based awards

     73        95        91        90   


 


 


 


Common stock and common stock equivalents (C)

     8,570        8,951        8,646        8,975   
    


 


 


 


Earnings Per Share:

                                

Basic (A/B)

   $ 0.78      $ 0.75      $ 1.41      $ 1.15   

Diluted (A/C)

   $ 0.77      $ 0.74      $ 1.39      $ 1.14   


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

 

(In millions)   

Three Months Ended

December 31,

    

Six Months Ended

December 31,

 


     2010      2009      2010      2009  

Shares excluded from calculations of diluted EPS

     56         101         57         155   


The decrease in anti-dilutive shares is 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. Shares of common stock into which the debt could convert were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. See also Note 10 – Debt.