A. Significant accounting policies
B. Accounting changes
C. Acquisitions/divestitures
D. Financial instruments (excluding derivatives)
E. Inventories
F. Financing receivables
G. Plant, rental machines and other property
H. Investments and sundry assets
R. Earnings per share of common stock
The following table presents the computation of basic and diluted earnings per share of common stock:
| For the year ended December 31: | 2007 | 2006 | 2005 |
|---|---|---|---|
| Weighted-average number of shares on which earnings per share calculations are based: |
|||
| Basic | 1,423,039,793 | 1,530,806,987 | 1,600,591,264 |
| Add—incremental shares under stock compensation plans | 22,730,971 | 18,074,331 | 21,757,121 |
| Add—incremental shares associated with Accelerated Share Repurchase agreements | 1,891,095 | — | — |
| Add—incremental shares associated with convertible notes | 1,362,191 | 3,273,706 | 3,791,228 |
| Add—incremental shares associated with contingently issuable shares | 1,546,529 | 1,380,360 | 1,493,049 |
| Assuming dilution | 1,450,570,579 | 1,553,535,384 | 1,627,632,662 |
| ($ in millions except per share amounts) | |||
|
* Reflects implementation of FASB Interpretation No. 47. See note B, “Accounting Changes,” for additional information. |
|||
| Basic: | |||
| Income from continuing operations | $ 10,418 | $ 9,416 | $ 7,994 |
| (Loss)/income from discontinued operations | (00) | 76 | (24) |
| Cumulative effect of change in accounting principle* | — | — | (36) |
| Net income from total operations on which basic earnings per share is calculated | $ 10,418 | $ 9,492 | $ 7,934 |
| Assuming dilution: | |||
| Income from continuing operations | $ 10,418 | $ 9,416 | $ 7,994 |
| Net loss applicable to contingently issuable shares liability | — | — | (2) |
| (Loss)/income from discontinued operations | (00) | 76 | (24) |
| Cumulative effect of change in accounting principle* | — | — | (36) |
| Net income from total operations on which diluted earnings per share is calculated | $ 10,418 | $ 9,492 | $ 7,932 |
| Earnings/(loss) per share of common stock: | |||
| Assuming dilution: | |||
| Continuing operations | $ 7.18 | $ 6.06 | $ 4.91 |
| Discontinued operations | (0.00) | 0.05 | (0.01) |
| Before cumulative effect of change in accounting principle | 7.18 | 6.11 | 4.90 |
| Cumulative effect of change in accounting principle* | — | — | (0.02) |
| Total assuming dilution | $ 7.18 | $ 6.11 | $ 4.87 |
| Basic: | |||
| Continuing operations | $ 7.32 | $ 6.15 | $ 4.99 |
| Discontinued operations | (0.00) | 0.05 | (0.02) |
| Before cumulative effect of change in accounting principle | 7.32 | 6.20 | 4.98 |
| Cumulative effect of change in accounting principle* | — | — | (0.02) |
| Total basic | $ 7.32 | $ 6.20 | $ 4.96 |
Weighted-average stock options to purchase 62,782,516 common shares in 2007, 157,942,283 common shares in 2006 and 165,615,293 common shares in 2005 were outstanding, but were not included in the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common shares for the full year, and therefore, the effect would have been antidilutive.
