Note 10—Earnings Per Share

Basic earnings per share is computed by dividing net income available to each class by the weighted-average number of shares of common stock outstanding and participating securities in the form of unvested restricted stock awards, unvested restricted stock units and unvested earned performance-based shares during the period. Net income is allocated to each class of common stock and participating securities based on its proportional ownership on an as-converted basis. The weighted-average number of shares of each class of common stock outstanding reflects changes in ownership over the periods presented. See Note 9—Stockholders' Equity.

Diluted earnings per share is computed by dividing net income available by the weighted-average number of shares of common stock outstanding, participating securities in the form of unvested restricted stock awards, unvested restricted stock units and unvested earned performance-based shares and, if dilutive, potential class A common stock equivalent shares outstanding during the period. Dilutive class A common stock equivalents may consist of: (1) shares of class A common stock issuable upon the conversion of class B and class C common stock based on the conversion rate in effect through the period, and (2) incremental shares of class A common stock calculated by applying the treasury stock method to the assumed exercise of employee stock options, the assumed purchase of stock under the Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

The following table presents earnings per share for the three months ended June 30, 2016.⁽¹⁾



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	329	1,899	$	0.17	$	412	2,386	⁽³⁾	$	0.17
Class B common stock	70		245	$	0.29	$	70	245		$	0.28
Class C common stock	12		18	$	0.69	$	13	18		$	0.69
Participating securities^(4),(5)	1		Not presented	Not presented		$	1	Not presented		Not presented
Net income	$	412

The following table presents earnings per share for the nine months ended June 30, 2016.⁽¹⁾



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	3,238	1,915	$	1.69	$	4,060	2,406	⁽³⁾	$	1.69
Class B common stock	684		245	$	2.79	$	683	245		$	2.78
Class C common stock	129		19	$	6.76	$	128	19		$	6.75
Participating securities^(4),(5)	9		Not presented	Not presented		$	9	Not presented		Not presented
Net income	$	4,060

The following table presents earnings per share for the three months ended June 30, 2015.⁽¹⁾



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	1,358	1,955	$	0.69	$	1,697	2,448	⁽³⁾	$	0.69
Class B common stock	281		245	$	1.14	$	281	245		$	1.14
Class C common stock	54		20	$	2.78	$	54	20		$	2.77
Participating securities⁽⁴⁾	4		Not presented	Not presented		$	4	Not presented		Not presented
Net income	$	1,697

The following table presents earnings per share for the nine months ended June 30, 2015.⁽¹⁾



	Basic Earnings Per Share					Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)		Income Allocation (A)⁽²⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)
Class A common stock	$	3,850	1,964	$	1.96	$	4,816	2,462	⁽³⁾	$	1.96
Class B common stock	793		245	$	3.23	$	792	245		$	3.22
Class C common stock	161		21	$	7.84	$	161	21		$	7.82
Participating securities⁽⁴⁾	12		Not presented	Not presented		$	12	Not presented		Not presented
Net income	$	4,816


⁽¹⁾	Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.

⁽²⁾

Net income is allocated based on proportional ownership on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the income allocation was 405 million for the three and nine months ended June 30, 2016 and 2015. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 73 million and 76 million for the three and nine months ended June 30, 2016, respectively, and 78 million and 82 million for the three and nine months ended June 30, 2015, respectively.

⁽³⁾

Weighted-average diluted shares outstanding are calculated on an as-converted basis, and include incremental common stock equivalents, as calculated under the treasury stock method. The computation includes approximately 5 million common stock equivalents for the three and nine months ended June 30, 2016 and 2015, because their effect would be dilutive. The computation excludes 1 million of common stock equivalents for the three months ended June 30, 2016 and 2015, and 2 million of common stock equivalents for the nine months ended June 30, 2016 and 2015, because their effect would have been anti-dilutive.


⁽⁴⁾	Participating securities include unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company's unvested restricted stock awards, unvested restricted stock units and unvested earned performance-based shares.

⁽⁵⁾

U.K.&I and Europe preferred stock were issued as part of the purchase price consideration in connection with the Visa Europe acquisition and are convertible into a number of shares of class A common stock or class A equivalent preferred stock upon certain conditions. See Note 2—Visa Europe, Note 3—U.S. and Europe Retrospective Responsibility Plans and Note 9—Stockholders' Equity. The Company did not include Visa Europe's financial results in the Company's unaudited consolidated statements of operations from the acquisition date, June 21, 2016, through June 30, 2016 as the impact is immaterial. The dilutive impact of the U.K.&I and Europe preferred stock from June 21, 2016 through June 30, 2016 was also not included in the calculation of basic or diluted earnings per share as the effect is immaterial.