Net Earnings Per Common Share

9 Months Ended

Sep. 30, 2022

NET EARNINGS PER COMMON SHAREBasic net earnings per common share from continuing operations (“EPS”) is calculated by taking net earnings from continuing operations less the MCPS dividends divided by the weighted average number of common shares outstanding for the applicable period. Diluted net EPS from continuing operations is computed by taking net earnings from continuing operations less the MCPS dividends divided by the weighted average number of common shares outstanding increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued and reduced by the number of shares the Company could have repurchased with the proceeds from the issuance of the potentially dilutive shares. For the three-month period ended September 30, 2022, approximately 538 thousand options to purchase shares were excluded from the diluted EPS from continuing operations calculation and for the nine-month periods ended September 30, 2022 and October 1, 2021, approximately 1.1 million and 88 thousand options, respectively, to purchase shares were excluded from the diluted EPS from continuing operations calculation, as the impact of their inclusion would have been anti-dilutive. No options to purchase shares were excluded from the diluted net EPS calculation for the three-month period ended October 1, 2021. Basic and diluted EPS are computed independently for each quarter and year-to-date period, and each period involves the use of different

weighted-average share count figures. As a result, and after factoring the effect of rounding to the nearest cent per share, the sum of prior quarterly EPS figures may not equal year-to-date EPS.

On April 15, 2022, all outstanding shares of the MCPS Series A converted into 11.0 million shares of the Company’s common stock. There were no MCPS Series A dividends declared in the second quarter of 2022 prior to their conversion and the MCPS Series A were dilutive for all periods prior to the conversion. Refer to Note 16 for additional information about the MCPS Series A conversion. The impact of the MCPS Series A calculated under the if-converted method was dilutive for the nine-month periods ended September 30, 2022 and October 1, 2021, and as such 4.0 million shares and 11.0 million shares, respectively, underlying the MCPS Series A were included in the calculation of diluted EPS. The related MCPS Series A dividends of $20 million and $59 million for the nine-month periods ended September 30, 2022 and October 1, 2021, respectively, were excluded from the calculation of net earnings for diluted EPS. The impact of the MCPS Series A calculated under the if-converted method was anti-dilutive for the three-month period ended October 1, 2021, and as such 11.0 million shares underlying the MCPS Series A were excluded from the calculation of diluted EPS for the three-month period and the related MCPS Series A dividends of $19 million were included in the calculation of net earnings for diluted EPS for the period.

The impact of the MCPS Series B calculated under the if-converted method was anti-dilutive for both the three and nine-month periods ended September 30, 2022 and October 1, 2021, and as such 8.6 million shares, for both the three and nine-month periods underlying the MCPS Series B were excluded from the calculation of diluted EPS and the related MCPS Series B dividends of $21 million and $22 million for the three-month periods, respectively, and $64 million for both nine-month periods were included in the calculation of net earnings for diluted EPS.

Information related to the calculation of net earnings per common share from continuing operations is summarized as follows ($ and shares in millions, except per share amounts):


	Three-Month Period Ended				Nine-Month Period Ended
	September 30, 2022		October 1, 2021		September 30, 2022		October 1, 2021
Numerator:
Net earnings from continuing operations	$	1,572	$	1,158	$	4,977	$	4,559
MCPS dividends	(21)		(41)		(84)		(123)
Net earnings from continuing operations attributable to common stockholders for Basic EPS	1,551		1,117		4,893		4,436

Adjustment for MCPS dividends for dilutive MCPS	—		—		20		59
Net earnings from continuing operations attributable to common stockholders after assumed conversions for Diluted EPS	$	1,551	$	1,117	$	4,913	$	4,495

Denominator:
Weighted average common shares outstanding used in Basic EPS	728.5		715.1		723.8		714.3
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive RSUs and PSUs	8.9		11.9		9.2		11.0
Assumed conversion of the convertible debentures	—		—		—		0.1
Weighted average MCPS converted shares	—		—		4.0		11.0
Weighted average common shares outstanding used in Diluted EPS	737.4		727.0		737.0		736.4

Basic EPS from continuing operations	$	2.13	$	1.56	$	6.76	$	6.21
Diluted EPS from continuing operations	$	2.10	$	1.54	$	6.67	$	6.10