PG&E 2010 Annual Report Download - page 88

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In calculating diluted EPS during the period PG&E Corporation’s Convertible Subordinated Notes were outstanding,
PG&E Corporation applied 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:
Year ended
December 31,
(in millions, except per share amounts) 2010 2009
Diluted
Income available for common shareholders $ 1,099 $ 1,220
Add earnings impact of assumed conversion of participating securities:
Interest expense on convertible subordinated notes, net of tax 815
Unrealized loss on embedded derivative, net of tax –2
Income available for common shareholders and assumed conversion $ 1,107 $ 1,237
Weighted average common shares outstanding, basic 382 368
Add incremental shares from assumed conversions:
Convertible subordinated notes 817
Employee share-based compensation 21
Weighted average common shares outstanding, diluted 392 386
Total earnings per common share, diluted $ 2.82 $ 3.20
84