IBM 2006 Annual Report Download - page 97
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Black
MAC
390 CG10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INTERNATIONAL BUSINESS MACHINES CORPORATION AND SUBSIDIARY COMPANIES
95
S. EARNINGS PER SHARE OF COMMON STOCK
The following table presents the computation of basic and diluted earnings per share of common stock:
FOR THE YEAR ENDED DECEMBER 31: 2006 2005* 2004
Weighted-average number of shares on which earnings
per share calculations are based:
Basic ,,, ,,, ,,,
Add—incremental shares under stock compensation plans ,, ,, ,,
Add—incremental shares associated with convertible notes ,, ,, ,,
Add—incremental shares associated with contingently issuable shares ,, ,, ,,
Assuming dilution ,,, ,,, ,,,
(Dollars in millions except per share amounts)
Basic:
Income from continuing operations $, $, $,
Income/(loss) from discontinued operations () ()
Cumulative effect of change in accounting principle** — () —
Net income from total operations on which
basic earnings per share is calculated $, $, $,
Assuming dilution:
Income from continuing operations $, $, $,
Net loss applicable to contingently issuable shares liability — () —
Income/(loss) from discontinued operations () ()
Cumulative effect of change in accounting principle** — () —
Net income from total operations on which
diluted earnings per share is calculated $, $, $,
Earnings/(loss) per share of common stock:
Assuming dilution:
Continuing operations $ . $ . $ .
Discontinued operations . (.) (.)
Before cumulative effect of change in accounting principle . . .
Cumulative effect of change in accounting principle** — (.) —
Total $ . $ . $ .
Basic:
Continuing operations $ . $ . $ .
Discontinued operations . (.) (.)
Before cumulative effect of change in accounting principle . . .
Cumulative effect of change in accounting principle** — (.) —
Total $ . $ . $ .
* Reclassified to conform with 2006 presentation.
** Reflects implementation of FASB Interpretation No. 47. See note B, “Accounting Changes,” on page 72 for additional information.
Weighted-average stock options to purchase 157,942,283 common shares in 2006, 165,615,293 common shares in 2005 and 133,220,730 common
shares in 2004 were outstanding, but were not included in the computation of diluted earnings per share because the exercise price of the options
was greater than the average market price of the common shares for the full year and, therefore, the effect would have been antidilutive.