Earnings Per Share

9 Months Ended

Sep. 30, 2015

Earnings Per Share

Earnings Per Share

Note 3Earnings Per Share

AbbVie calculates earnings per share (EPS) using the more dilutive of the treasury stock or the two-class method. For both the three and nine months ended September 30, 2015, the two-class method was more dilutive. As such, the dilutive effect of unvested restricted stock units (RSUs) and restricted stock awards (RSAs) of approximately 3 million shares for both the three and nine months ended September 30, 2015 were excluded from the denominator for the calculation of diluted EPS. These awards otherwise would have been included in the calculation of EPS under the treasury stock method. Additionally, all earnings (distributed and undistributed) allocable to participating securities, including performance-based awards not otherwise included in the calculation of EPS under the treasury stock method, were excluded from the numerator for the calculation of basic and diluted earnings per share under the two-class method. Earnings allocable to participating securities for the three and nine months ended September 30, 2015 were $7 million and $18 million, respectively.

As further described in Note 10, AbbVie entered into and executed a $5.0 billion accelerated share repurchase agreement (ASR) with Morgan Stanley & Co. LLC (Morgan Stanley) on May 26, 2015, pursuant to which AbbVie paid $5.0 billion for an initial delivery of 68 million shares of AbbVie’s common stock. The initial delivery of shares represented approximately 90% of the total shares expected to be delivered under the ASR. In the three months ended September 30, 2015, Morgan Stanley delivered an additional 5 million shares of AbbVie’s common stock to AbbVie in final settlement of the ASR. For purposes of calculating EPS, AbbVie reflected the ASR as a repurchase of AbbVie common stock. See Note 10 for additional information.

The number of common shares issuable under stock-based compensation plans that were excluded from the computation of earnings per common share because the effect would have been antidilutive were not material for both the three and nine months ended September 30, 2015.

For both the three and nine months ended September 30, 2014, AbbVie determined the two-class method was more dilutive. As a result, the dilutive effect of unvested RSUs and RSAs of approximately 4 million shares for both the three and nine months ended September 30, 2014 were excluded from the denominator for the calculation of diluted EPS. Additionally, earnings allocable to participating securities for the three and nine months ended September 30, 2014 was $3 million and $14 million, respectively. For both the three and nine months ended September 30, 2014, the number of common shares issuable under stock-based compensation plans that were excluded from the computation of earnings per common share because the effect would have been antidilutive were not material.