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NOTE 8: EARNINGS PER SHARE
PG&E Corporation’s earnings per common share (“EPS”) is calculated utilizing the “two-class” method by dividing the sum of
distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted
average number of common shares outstanding during the period. In applying the two-class method, undistributed earnings are
allocated to both common shares and participating securities. PG&E Corporation’s Convertible Subordinated Notes met the
criteria of participating securities as the holders were entitled to receive dividends similar to holders of common stock.
As of June 29, 2010, all of PG&E Corporation’s Convertible Subordinated Notes had been converted into common
stock. Therefore, there were no participating securities outstanding at December 31, 2010. (See Note 4 above.)
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 basic EPS:
Year Ended December 31,
(in millions, except per share amounts) 2010 2009 2008
Basic
Income available for common shareholders $ 1,099 $ 1,220 $ 1,338
Less: distributed earnings to common shareholders 706 621 560
Undistributed earnings 393 599 778
Less: undistributed earnings from discontinued operations –– 154
Undistributed earnings from continuing operations $ 393 $ 599 $ 624
Allocation of undistributed earnings to common shareholders
Distributed earnings to common shareholders $ 706 $ 621 $ 560
Undistributed earnings allocated to common shareholders – continuing operations 385 573 592
Undistributed earnings allocated to common shareholders – discontinued operations –– 146
Total common shareholders earnings $ 1,091 $ 1,194 $ 1,298
Weighted average common shares outstanding, basic 382 368 357
Convertible subordinated notes 817 19
Weighted average common shares outstanding and participating securities 390 385 376
Net earnings per common share, basic
Distributed earnings, basic(1) $ 1.85 $ 1.69 $ 1.57
Undistributed earnings – continuing operations, basic 1.01 1.56 1.66
Undistributed earnings – discontinued operations, basic –– 0.41
Total $ 2.86 $ 3.25 $ 3.64
(1) Distributed earnings, basic may differ from actual per share amounts paid as dividends, as the EPS computation under GAAP requires the use of the
weighted average, rather than the actual, number of shares outstanding.
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