Earnings Per Share

9 Months Ended

Jun. 30, 2020

Note 11—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 10—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 presents earnings per share for the three months ended June 30, 2020:


	Basic Earnings Per Share									Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽²⁾		Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽²⁾
Class A common stock	$	1,814	1,690	$	1.07	$	2,373	2,214	⁽³⁾	$	1.07
Class B common stock	428		245	$	1.74	$	427	245		$	1.74
Class C common stock	46		11	$	4.29	$	47	11		$	4.29
Participating securities⁽⁴⁾	85		Not presented	Not presented		$	85	Not presented		Not presented
Net income	$	2,373

The following table presents earnings per share for the nine months ended June 30, 2020:


	Basic Earnings Per Share									Diluted Earnings Per Share
	(in millions, except per share data)
	Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽²⁾		Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽²⁾
Class A common stock	$	6,679	1,702	$	3.92	$	8,729	2,227	⁽³⁾	$	3.92
Class B common stock	1,564		245	$	6.37	$	1,561	245		$	6.36
Class C common stock	172		11	$	15.70	$	172	11		$	15.68
Participating securities⁽⁴⁾	314		Not presented	Not presented		$	314	Not presented		Not presented
Net income	$	8,729

The following table 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)⁽¹⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽²⁾		Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽²⁾
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 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)⁽¹⁾		Weighted- Average Shares Outstanding (B)	Earnings per Share = (A)/(B)⁽²⁾		Income Allocation (A)⁽¹⁾		Weighted- Average Shares Outstanding (B)		Earnings per Share = (A)/(B)⁽²⁾
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

⁽¹⁾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 398 million for the three and nine months ended June 30, 2020 and 400 million for the three and nine months ended June 30, 2019. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 43 million and 44 million for the three and nine months ended June 30, 2020, respectively, and 46 million and 47 million for the three and nine months ended June 30, 2019, 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, 2020 and 2019, and 44 million of as-converted Europe preferred stock for the three and nine months ended June 30, 2020 and 2019.

⁽²⁾Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.

⁽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 common stock equivalents of 3 million for the three and nine months ended June 30, 2020 and 2019, because their effect would have been dilutive. The computation excludes common stock equivalents of 1 million for the three and nine months ended June 30, 2020, and less than 1 million for the three and nine months ended June 30, 2019, 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 UK&I and Europe preferred stock and restricted stock units. Participating securities’ income is allocated based on the weighted-average number of shares of as-converted stock.