Earnings Per Share

9 Months Ended

Jun. 30, 2019

Note 10—Earnings Per Share

Basic earnings per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock outstanding and participating securities 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 outstanding of each class of common stock 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 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 UK&I and Europe preferred stock and class B and C common stock based on the conversion rates 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 Company’s Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

The following table⁽¹⁾ presents earnings per share for the three months ended June 30, 2019:



	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	$	2,379	1,735	$	1.37	$	3,101	2,265	⁽³⁾	$	1.37
Class B common stock	549		245	$	2.23	548		245		$	2.23
Class C common stock	63		12	$	5.48	63		12		$	5.48
Participating securities⁽⁴⁾	110		Not presented	Not presented		110		Not presented		Not presented
Net income	$	3,101

The following table⁽¹⁾ presents earnings per share for the nine months ended June 30, 2019:



	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	$	6,956	1,748	$	3.98	$	9,055	2,278	⁽³⁾	$	3.97
Class B common stock	1,592		245	$	6.49	1,590		245		$	6.48
Class C common stock	186		12	$	15.92	185		12		$	15.90
Participating securities⁽⁴⁾	321		Not presented	Not presented		321		Not presented		Not presented
Net income	$	9,055

The following table⁽¹⁾ presents earnings per share for the three months ended June 30, 2018:



	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	$	1,793	1,784	$	1.00	$	2,329	2,321	⁽³⁾	$	1.00
Class B common stock	406		245	$	1.66	406		245		$	1.65
Class C common stock	49		12	$	4.02	49		12		$	4.01
Participating securities⁽⁴⁾	81		Not presented	Not presented		81		Not presented		Not presented
Net income	$	2,329

The following table⁽¹⁾ presents earnings per share for the nine months ended June 30, 2018:



	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	$	5,746	1,798	$	3.20	$	7,456	2,337	⁽³⁾	$	3.19
Class B common stock	1,293		245	$	5.27	1,291		245		$	5.26
Class C common stock	159		12	$	12.78	158		12		$	12.76
Participating securities⁽⁴⁾	258		Not presented	Not presented		259		Not presented		Not presented
Net income	$	7,456


⁽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 400 million for the three and nine months ended June 30, 2019, and 405 million for the three and nine months ended June 30, 2018. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 46 million and 47 million for the three and nine months ended June 30, 2019, respectively, and 49 million and 50 million for the three and nine months ended June 30, 2018, respectively. The weighted-average number of shares of preferred stock included within participating securities was 32 million of as-converted UK&I preferred stock for the three and nine months ended June 30, 2019 and 2018. The weighted-average number of shares of preferred stock included within participating securities was 44 million of as-converted Europe preferred stock for the three and nine months ended June 30, 2019 and 2018.

⁽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 3 million common stock equivalents for the three and nine months ended June 30, 2019 and 2018, because their effect would have been dilutive. The computation excludes less than 1 million of common stock equivalents for the three and nine months ended June 30, 2019 and 2018, because their effect would have been anti-dilutive.

⁽⁴⁾

Participating securities include preferred stock outstanding and unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company’s UK&I and Europe preferred stock, restricted stock awards, restricted stock units and earned performance-based shares. Participating securities’ income is allocated based on the weighted-average number of shares of as-converted stock.