HP 2011 Annual Report Download - page 103
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 3: Net Earnings Per Share
HP calculates basic earnings per share (‘‘EPS’’) using net earnings and the weighted-average
number of shares outstanding during the reporting period. Diluted EPS includes any dilutive effect of
outstanding stock options, PRUs, restricted stock units and restricted stock.
The reconciliation of the numerators and denominators of the basic and diluted EPS calculations
was as follows for the following fiscal years ended October 31:
2011 2010 2009
In millions, except per share
amounts
Numerator:
Net earnings(1) ............................................ $7,074 $8,761 $7,660
Denominator:
Weighted-average shares used to compute basic EPS ................ 2,094 2,319 2,388
Dilutive effect of employee stock plans .......................... 34 53 49
Weighted-average shares used to compute diluted EPS ............... 2,128 2,372 2,437
Net earnings per share:
Basic ................................................... $ 3.38 $ 3.78 $ 3.21
Diluted ................................................. $ 3.32 $ 3.69 $ 3.14
(1) Net earnings available to participating securities were not significant for fiscal years 2011, 2010 and
2009. HP considers restricted stock that provides the holder with a non-forfeitable right to receive
dividends to be a participating security.
HP excludes options with exercise prices that are greater than the average market price from the
calculation of diluted EPS because their effect would be anti-dilutive. In fiscal years 2011, 2010 and
2009, HP excluded from the calculation of diluted EPS options to purchase 25 million shares, 5 million
shares and 85 million shares, respectively. In addition, HP also excluded from the calculation of diluted
EPS options to purchase an additional 1 million shares, 2 million shares and 2 million shares in fiscal
years 2011, 2010 and 2009, respectively, whose combined exercise price, unamortized fair value and
excess tax benefits were greater in each of those periods than the average market price for HP’s
common stock because their effect would be anti-dilutive.
95