Basic earnings per common share amounts are computed by dividing net income by the average number of common shares outstanding during the year. The average number of common shares outstanding is defined as the sum of the average number of common shares issued, reduced by the average number of shares in treasury and by the average number of shares that will be acquired under physically settled forward purchase contracts and increased by undistributed vested shares awarded under deferred share plans.
Diluted earnings per share assumes the conversion into common shares of outstanding securities or other contracts to issue common stock, such as share options, unvested deferred share awards and certain forward contracts.
The following table sets forth the computation of basic and diluted earnings per share:
| in € m. | 2003 | 2002 | 2001 |
| Income before cumulative effect of accounting changes, net of tax | 1,214 | 360 | 374 |
| Cumulative effect of accounting changes, net of tax | 151 | 37 | (207) |
| Numerator for basic earnings per share – net income | 1,365 | 397 | 167 |
| Number of shares in m. | |||
| Denominator for basic earnings per share – | 559.3 | 615.9 | 619.8 |
| weighted-average shares outstanding | |||
| Effect of dilutive securities | |||
| Derivatives | 11.3 | 4.4 | 0.8 |
| Convertible bonds | – | 0.1 | 0.2 |
| Deferred shares | 19.1 | 6.1 | 2 |
| Dilutive potential common shares | 30.4 | 10.6 | 3 |
| Denominator for diluted earnings per share – | 589.7 | 626.5 | 622.8 |
| adjusted weighted-average shares after assumed conversions | |||
The diluted earnings per share computations do not include the antidilutive effect of the following potential common shares:
| In € m. | 2003 | 2002 | 2001 |
| Forward purchase contracts | – | – | 33.5 |
| Forward sale contracts | 3.1 | 26 | 9.7 |
| Put options sold | – | 0.4 | 0.1 |
| Call options sold | 1.3 | 0.3 | – |
| Stock compensation awards | 15.5 | 0.2 | – |
| in € | 2003 | 2002 | 2001 |
| Basic earnings per share | |||
| Income before cumulative effect of accounting changes, | 2.17 | 0.58 | 0.6 |
| net of tax | |||
| Cumulative effect of accounting changes, net of tax | 0.27 | 0.06 | (0.33) |
| Net income | 2.44 | 0.64 | 0.27 |
| Diluted earnings per share | |||
| Income before cumulative effect of accounting changes, | 2.06 | 0.57 | 0.6 |
| net of tax | |||
| Cumulative effect of accounting changes, net of tax | 0.25 | 0.06 | (0.33) |
| Net income | 2.31 | 0.63 | 0.27 |