PG&E 2009 Annual Report Download - page 82

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In calculating diluted EPS, PG&E Corporation applies the if-converted method to reflect the dilutive effect of the
Convertible Subordinated Notes to the extent that the impact is dilutive when compared to basic EPS. In addition, PG&E
Corporation applies the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation
in the calculation of diluted EPS. The following is a reconciliation of PG&E Corporation’s income available for common
shareholders and weighted average shares of common stock outstanding for calculating diluted EPS for 12 months ended
December 31, 2009:
(in millions, except per share amounts) December 31,
2009
Diluted
Income Available for Common Shareholders $1,220
Add earnings impact of assumed conversion of participating securities:
Interest expense on convertible subordinated notes, net of tax 15
Unrealized loss on embedded derivative, net of tax 2
Income Available for Common Shareholders and Assumed Conversion $1,237
Weighted average common shares outstanding, basic 368
Add incremental shares from assumed conversions:
Convertible subordinated notes 17
Employee share-based compensation 1
Weighted average common shares outstanding, diluted 386
Total earnings per common share, diluted $ 3.20
Stock options to purchase 7,285 shares of PG&E Corporation common stock were excluded from the computation of
diluted EPS for the 12 months ended December 31, 2009 because the exercise prices of these options were greater than
the average market price of PG&E Corporation common stock during this period.
78