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NOTE 19. EARNINGS PER SHARE
We calculate basic earnings per share (EPS) of common stock by dividing net income attributable to Cummins Inc. by the weighted-average number of common shares outstanding for the period. The calculation of diluted EPS assumes the issuance of common stock for all potentially dilutive share equivalents outstanding. We exclude shares of common stock held in the EBT (see Note 15, "SHAREHOLDERS' EQUITY") from the calculation of the weighted-average common shares outstanding until those shares are distributed from the EBT to the RSP. Following are the computations for basic and diluted earnings per share:
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Years ended December 31, |
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Dollars in millions, except per share amounts
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2011 |
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2010 |
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2009 |
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Net income attributable to Cummins Inc.
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$ |
1,848 |
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$ |
1,040 |
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$ |
428 |
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Weighted-average commons shares outstanding:
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Basic
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192,972,211 |
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196,699,155 |
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197,445,998 |
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Dilutive effect of stock compensation awards
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625,667 |
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449,252 |
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249,126 |
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Diluted
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193,597,878 |
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197,148,407 |
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197,695,124 |
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Earnings per common share attributable to Cummins Inc.
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Basic
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$ |
9.58 |
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$ |
5.29 |
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$ |
2.17 |
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Diluted
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9.55 |
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5.28 |
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2.16 |
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The weighted-average diluted common shares outstanding for 2011, 2010 and 2009 excludes the effect of approximately 177,460, 7,795 and 53,750 weighted-average shares, respectively, of common stock options, since such options had an exercise price in excess of the monthly average market value of our common stock during that year.
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