Merck & Co. Inc. | 2013 | FY | 3


Earnings per Share
Prior to 2013, the Company calculated earnings per share pursuant to the two-class method under which all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights to receive dividends. RSUs and certain PSUs granted before December 31, 2009 (which generally have a three year vesting period) to certain management level employees met the definition of participating securities. RSUs and PSUs issued on or after January 1, 2010, do not meet the definition of participating securities; therefore, beginning in 2013 the Company no longer applies the two-class method.
The calculations of earnings per share are as follows:
Years Ended December 31
2013
 
2012
 
2011
Basic Earnings per Common Share
 
 
 
 
 
Net income attributable to Merck & Co., Inc.
$
4,404

 
$
6,168

 
$
6,272

Less: Income allocated to participating securities

 
3

 
15

Net income allocated to common shareholders
$
4,404

 
$
6,165

 
$
6,257

Average common shares outstanding
2,963

 
3,041

 
3,071

 
$
1.49

 
$
2.03

 
$
2.04

Earnings per Common Share Assuming Dilution
 
 
 
 
 
Net income attributable to Merck & Co., Inc.
$
4,404

 
$
6,168

 
$
6,272

Less: Income allocated to participating securities

 
3

 
15

Net income allocated to common shareholders
$
4,404

 
$
6,165

 
$
6,257

Average common shares outstanding
2,963

 
3,041

 
3,071

Common shares issuable (1)
33

 
35

 
23

Average common shares outstanding assuming dilution
2,996

 
3,076

 
3,094

 
$
1.47

 
$
2.00

 
$
2.02

(1) 
Issuable primarily under share-based compensation plans.
In 2013, 2012 and 2011, 25 million, 104 million and 169 million, respectively, of common shares issuable under share-based compensation plans were excluded from the computation of earnings per common share assuming dilution because the effect would have been antidilutive.

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