Microsoft 2012 Annual Report Download - page 51

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NOTE 2 — EARNINGS PER SHARE
Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock
outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common
stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.
Dilutive potential common shares include outstanding stock options, stock awards, and shared performance stock awards.
The components of basic and diluted EPS are as follows:
(In millions, except earnings per share)
Year Ended June 30,
2012
2011
2010
Net income available for common shareholders (A)
$
16,978
$
23,150
$
18,760
Weighted average outstanding shares of common stock (B)
8,396
8,490
8,813
Dilutive effect of stock-based awards
110
103
114
Common stock and common stock equivalents (C)
8,506
8,593
8,927
Earnings Per Share
Basic (A/B)
$
2.02
$
2.73
$
2.13
Diluted (A/C)
$
2.00
$
2.69
$
2.10
We excluded the following shares underlying stock-based awards from the calculations of diluted EPS because their
inclusion would have been anti-dilutive:
(In millions)
Year Ended June 30,
2012
2011
2010
Shares excluded from calculations of diluted EPS
1
21
28
In June 2010, we issued $1.25 billion of zero-coupon debt securities that are convertible into shares of our common stock
if certain conditions are met. As of June 30, 2012, none of these securities had met price or other conditions that would
make them eligible for conversion and therefore were excluded from the calculation of basic and diluted EPS. See
Note 12 – Debt for additional information.
NOTE 3 — OTHER INCOME (EXPENSE)
The components of other income (expense) were as follows:
(In millions)
Year Ended June 30,
2012
2011
2010
Dividends and interest income
$
800
$
900
$
843
Interest expense
(380
)
(295
)
(151
)
Net recognized gains on investments
564
439
348
Net losses on derivatives
(364
)
(77
)
(140
)
Net gains (losses) on foreign currency remeasurements
(117
)
(26
)
1
Other
1
(31
)
14
Total
$
504
$
910
$
915