Earnings Per Share

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:



	Second Quarters				Six Months
	2018		2017		2018		2017
Numerator (Dollars in millions):
Net Earnings	$	877	$	510	$	1,572	$	872

Denominator (Units in millions):
Average Common Shares Outstanding	864		920		875		923
Other Potentially Dilutive Common Shares	4		4		3		3
Average Common Shares Outstanding, Assuming Dilution	868		924		878		926

Net Earnings Per Share, Basic	$	1.02	$	0.55	$	1.80	$	0.94
Net Earnings Per Share, Assuming Dilution	$	1.01	$	0.55	$	1.79	$	0.94

Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock equivalents outstanding adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards, which include long-term incentive awards and employee stock options.

The Earnings Per Share Topic in the FASB's ASC requires CSX to include additional shares in the computation of earnings per share, assuming dilution. The additional shares included in diluted earnings per share represent the number of shares that would be issued if all of the above potentially dilutive instruments were converted into CSX common stock.

When calculating diluted earnings per share, this rule requires CSX to include the potential shares that would be outstanding if all outstanding stock options were exercised. This number is different from outstanding stock options because it is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. Approximately one million and 10 million of total average outstanding stock options for the second quarters ended June 30, 2018 and June 30, 2017, respectively, were excluded from the diluted earnings per share calculation because their effect was antidilutive.

Share Repurchases

In February 2018, the Company announced an increase to the $1.5 billion share repurchase program first announced in October 2017, bringing the total authorized to $5 billion. This program is expected to be completed by the end of first quarter 2019. During the second quarters of 2018 and 2017, the Company repurchased approximately $974 million, or 16 million shares, and $499 million, or 9 million shares, respectively. During the six months of 2018 and 2017, the Company repurchased $1.8 billion, or 31 million shares, and $757 million, or 15 million shares, respectively.

NOTE 2. Earnings Per Share, continued

On April 20, 2018, the Company entered into an accelerated share repurchase agreement to repurchase shares of the Company’s common stock. Under this agreement, the Company made a prepayment of $450 million to a financial institution and received an initial delivery of shares valued at $360 million, or 6 million shares. The remaining balance of $90 million was settled through receipt of additional shares on July 17, 2018, with the final net number of shares calculated based on the volume-weighted average price of the Company's common stock over the term of the agreement, less a discount. Approximately 7 million total shares were repurchased under the agreement.

Under an accelerated share repurchase agreement in January 2018, the Company made a prepayment of $150 million to a financial institution and received an initial delivery of shares valued at $120 million. The remaining balance of $30 million was settled through receipt of additional shares in February 2018 with the final net number of shares calculated based on the volume-weighted average price of the Company's common stock over the term of the agreement, less a discount. Approximately 3 million total shares were repurchased under the agreement.

Management's assessment of market conditions and other factors guides the timing and volume of repurchases. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the ASC, the excess of repurchase price over par value is recorded in retained earnings.