Earnings Per Share

3 Months Ended

Mar. 31, 2018

The following is a reconciliation of the shares used in calculating basic and diluted net earnings per share.



	Three Months Ended
	March 31,
	2018		2017
Net income (in millions)	$	79	$	56
Shares (in thousands):
Weighted average common shares outstanding	179,858		179,542
Add: Participating securities (a)	23		34
Weighted average common shares outstanding — Basic	179,881		179,576
Plus incremental shares from assumed conversions: (b)
Dilutive effect of stock options	928		559
Dilutive effect of restricted stock units and performance share units	556		515
Weighted average common shares outstanding — Diluted	181,365		180,650
Basic earnings per share	$	0.44	$	0.31
Diluted earnings per share	$	0.43	$	0.31


(a)	Restricted stock unit awards containing rights to non-forfeitable dividends that participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share.

(b)

Incremental shares from stock options, restricted stock units and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 15, "Share-Based Compensation Plans" to the condensed consolidated financial statements for further detail on the performance share units.



	Three Months Ended
	March 31,
(in thousands)	2018	2017
Stock options	1,218	1,772
Restricted stock units	294	389
Performance share units	538	404