NOTE 2 - EARNINGS PER SHARE

The table below represents the computation of UAL’s basic and diluted earnings per share amounts and the number of securities that have been excluded from the computation of diluted earnings per share amounts because they were antidilutive (in millions, except per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Basic earnings per share:
Net income	$	789	$	469	$	180	$	52
Less: Income allocable to participating securities		(1)		(1)		(1)		—

Earnings available to common stockholders	$	788	$	468	$	179	$	52

Basic weighted-average shares outstanding		373		341		371		337

Earnings per share, basic	$	2.11	$	1.37	$	0.48	$	0.15

Diluted earnings per share:
Earnings available to common stockholders	$	788	$	468	$	179	$	52
Effect of convertible notes		6		11		6		—

Earnings available to common stockholders including the effect of dilutive securities	$	794	$	479	$	185	$	52

Diluted shares outstanding:
Basic weighted-average shares outstanding		373		341		371		337
Effect of convertible notes		22		53		21		—
Effect of employee stock options		1		—		—		—

Diluted weighted-average shares outstanding		396		394		392		337

Earnings per share, diluted	$	2.01	$	1.21	$	0.47	$	0.15

Potentially dilutive shares excluded from diluted per share amounts:
Restricted stock and stock options		1		3		2		3
Convertible notes		—		—		4		57

During the second quarter of 2014, UAL used cash to purchase and retire $28 million aggregate principal amount of its 4.5% Convertible Notes due 2015 (the “4.5% Convertible Notes”) in market transactions. The corresponding equivalent amount of shares of UAL common stock are excluded from the determination of diluted weighted-average shares outstanding for the three and six months ended June 30, 2014 from the date the debt was purchased.

In the first quarter of 2014, UAL issued approximately five million additional shares of UAL common stock in exchange for, or upon conversion of, $46 million in aggregate principal amount of UAL’s outstanding 6% convertible senior notes due 2029 held by holders of these notes. The newly issued shares of UAL common stock are included in the determination of basic weighted-average shares outstanding for the three and six months ended June 30, 2014 from the date the shares were issued. The Company retired the 6% convertible senior notes acquired in the exchange.

Also, in the first quarter of 2014, holders of substantially all of the remaining $156 million outstanding principal amount of the 4.5% Senior Limited-Subordination Convertible Notes due 2021 (the “4.5% Notes”) exercised their right to convert such notes into approximately five million shares of UAL common stock at a conversion rate of 30.6419 shares of UAL common stock per $1,000 principal amount of 4.5% Notes. The newly issued shares of UAL common stock are included in the determination of basic weighted-average shares outstanding for the three and six months ended June 30, 2014 from the date the shares were issued. See Note 9 for additional information related to exercises of rights under the 4.5% Notes.

UAL’s Board of Directors has authorized a share repurchase program to acquire up to $1 billion of UAL’s common stock. UAL may repurchase shares through the open market, privately negotiated transactions, block trades, or accelerated share repurchase transactions from time to time in accordance with applicable securities laws. UAL will repurchase shares of common stock subject to prevailing market conditions, and may discontinue such repurchases at any time. On July 24, 2014, UAL entered into agreements under which it will repurchase approximately $200 million of shares of UAL common stock through an accelerated share repurchase program. The specific number of shares that UAL will ultimately repurchase under this accelerated share repurchase program will be determined based on a calculation period not to exceed approximately three months.