Earnings Per Share

12 Months Ended

Sep. 30, 2019

Note 15—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 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 14—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 Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.

The following table presents earnings per share for fiscal 2019⁽¹⁾.



	Basic Earnings Per Share					Diluted Earnings Per Share
	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)
	(in millions, except per share data)
Class A common stock	$	9,273	1,742	$	5.32	$	12,080	2,272	⁽³⁾	$	5.32
Class B common stock	2,130		245	$	8.68	2,127		245		$	8.66
Class C common stock	247		12	$	21.30	246		12		$	21.26
Participating securities⁽⁴⁾	430		Not presented	Not presented		429		Not presented		Not presented
Net income	$	12,080

The following table presents earnings per share for fiscal 2018⁽¹⁾.



	Basic Earnings Per Share					Diluted Earnings Per Share
	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)
	(in millions, except per share data)
Class A common stock	$	7,937	1,792	$	4.43	$	10,301	2,329	⁽³⁾	$	4.42
Class B common stock	1,787		245	$	7.28	1,785		245		$	7.27
Class C common stock	218		12	$	17.72	217		12		$	17.69
Participating securities⁽⁴⁾	359		Not presented	Not presented		358		Not presented		Not presented
Net income	$	10,301

The following table presents earnings per share for fiscal 2017⁽¹⁾.



	Basic Earnings Per Share					Diluted Earnings Per Share
	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)
	(in millions, except per share data)
Class A common stock	$	5,170	1,845	$	2.80	$	6,699	2,395	⁽³⁾	$	2.80
Class B common stock	1,134		245	$	4.62	1,132		245		$	4.61
Class C common stock	163		14	$	11.21	162		14		$	11.19
Participating securities⁽⁴⁾	232		Not presented	Not presented		232		Not presented		Not presented
Net income	$	6,699


⁽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, 403 million and 405 million for fiscal 2019, 2018 and 2017, respectively. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 46 million, 49 million and 58 million for fiscal 2019, 2018 and 2017, respectively. The weighted-average number of shares of preferred stock included within participating securities was 32 million, 32 million and 33 million of as-converted UK&I preferred stock for fiscal 2019, 2018 and 2017, respectively, and 44 million of as-converted Europe preferred stock for fiscal 2019, 2018 and 2017.

⁽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 3 million, 3 million and 5 million common stock equivalents for fiscal 2019, 2018 and 2017, respectively, because their effect would have been dilutive. The computation excludes 1 million, 1 million and 2 million of common stock equivalents for fiscal 2019, 2018 and 2017, respectively, 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. See Note 14—Stockholders’ Equity.