Net Earnings Per Common Share

6 Months Ended

Jun. 30, 2023

NET EARNINGS PER COMMON SHAREBasic net earnings per common share (“EPS”) is calculated by taking net earnings less the Mandatory Convertible Preferred Stock (“MCPS”) dividends divided by the weighted average number of common shares outstanding for the applicable period. Diluted net EPS is computed by taking net earnings 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 periods ended June 30, 2023 and July 1, 2022, approximately 4.7 million and 2.4 million options, respectively, and for the six-month periods ended June 30, 2023 and July 1, 2022, approximately 3.5 million and 2.4 million options, respectively, to purchase shares were excluded from the diluted EPS calculation, as the impact of their inclusion would have been anti-dilutive. 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.

The impact of the MCPS Series B calculated under the if-converted method was dilutive for the three-month period ended June 30, 2023, and as such 1.5 million shares underlying the MCPS Series B were included in the calculation of diluted EPS in the three-month period. The impact of the MCPS Series B calculated under the if-converted method was anti-dilutive for the six-month period ended June 30, 2023 and the three and six-month periods ended July 1, 2022, and as such 5.1 million shares for the six-month period ended June 30, 2023 and 8.6 million for both the three and six-month periods ended July 1, 2022 underlying the MCPS Series B were excluded from the calculation of diluted EPS and the related MCPS Series B dividends of $21 million for the six-month period ended June 30, 2023 and $22 million and $43 million for the three and six-month periods ended July 1, 2022, respectively, were included in the calculation of net earnings for diluted EPS. There were no MCPS Series B dividends declared in the second quarter of 2023 prior to their conversion. As of April 17, 2023, all outstanding shares of the MCPS Series B converted into 8.6 million shares of the Company’s common stock.

The impact of the MCPS Series A calculated under the if-converted method was dilutive for both the three and six-month periods ended July 1, 2022, and as such 1.1 million and 6.0 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 for the six-month period ended July 1, 2022 were excluded from the calculation of net earnings for diluted 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. Refer to Note 14 for additional information about the MCPS Series A and B conversions.

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


	Three-Month Period Ended				Six-Month Period Ended
	June 30, 2023		July 1, 2022		June 30, 2023		July 1, 2022
Numerator:
Net earnings	$	1,106	$	1,680	$	2,556	$	3,405
MCPS dividends	—		(22)		(21)		(63)
Net earnings attributable to common stockholders for Basic EPS	1,106		1,658		2,535		3,342

Adjustment for MCPS dividends for dilutive MCPS	—		—		—		20
Net earnings attributable to common stockholders after assumed conversions for Diluted EPS	$	1,106	$	1,658	$	2,535	$	3,362

Denominator:
Weighted average common shares outstanding used in Basic EPS	737.3		726.7		733.4		721.5
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive restricted stock units (“RSUs”) and performance stock units (“PSUs”)	5.9		8.2		6.8		9.3

Weighted average MCPS converted shares	1.5		1.1		—		6.0
Weighted average common shares outstanding used in Diluted EPS	744.7		736.0		740.2		736.8

Basic EPS	$	1.50	$	2.28	$	3.46	$	4.63
Diluted EPS	$	1.49	$	2.25	$	3.42	$	4.56