NOTE 16: EARNINGS PER SHARE

Basic earnings per share computations are based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share include any dilutive effect of potential common shares. In periods with a net loss from continuing operations available to common shareholders, diluted earnings per share are calculated using weighted-average basic shares for that period, as utilizing diluted shares would be anti-dilutive to loss per share.

A reconciliation of the amounts used to calculate basic and diluted earnings per share for the three and nine months ended September 30, 2017 follows: (in millions):

	Three Months Ended			Nine Months Ended
	September 30, 2017			September 30, 2017
Loss from continuing operations attributable to Eastman Kodak Company	$	(46	)	$	(32	)
Less: Series A convertible preferred stock cash dividend		(3	)		(8	)
Less: Series A convertible preferred stock deemed dividend		(2	)		(6	)
Loss from continuing operations available to common shareholders - basic and diluted	$	(51	)	$	(46	)

Loss from net earnings attributable to Eastman Kodak Company	$	(46	)	$	(35	)
Less: Series A convertible preferred stock cash dividend		(3	)		(8	)
Less: Series A convertible preferred stock deemed dividend		(2	)		(6	)
Loss from net earnings available to common shareholders - basic and diluted	$	(51	)	$	(49	)

Weighted-average common shares outstanding - basic and diluted		42.5			42.5

As a result of the net loss from continuing operations available to common shareholders for the three and nine months ending September 30, 2017, Kodak calculated diluted earnings per share using weighted-average basic shares outstanding for those periods. If Kodak reported earnings from continuing operations available to common shareholders for the three and nine months ending September 30, 2017, the calculation of diluted earnings per share would have included the assumed conversion of 0.2 million of unvested restricted stock units.

The computation of diluted earnings per share for the three and nine months ended September 30, 2017 also excluded the impact of (1) the assumed conversion of 2.0 million shares of Series A convertible preferred shares, (2) the assumed conversion of net share settled warrants to purchase 1.8 million shares of common stock at an exercise price of $14.93, (3) the assumed conversion of net share settled warrants to purchase 1.8 million shares of common stock at an exercise price of $16.12 and (4) the assumed conversion of 4.6 million outstanding employee stock options because the effects would have been anti-dilutive.

Weighted average diluted shares were 42.8 million for the three-month period and 42.5 for the nine-month period ended September 30, 2016, respectively, and included the dilutive effect of 0.4 million and 0.3 million unvested restricted stock units for the three and nine month periods ended September 30, 2016, respectively. In addition, the weighted average diluted shares for the three-month period ended September 30, 2016 included the dilutive effect of net share settled warrants to purchase 0.1 million shares of common stock at an exercise price of $14.93.

The computation of diluted earnings per share for the three and nine month periods ended September 30, 2016 excluded the impact of the assumed conversion of net share settled warrants to purchase 1.8 million shares of common stock at an exercise price of $16.12 and the assumed conversion of 2.0 million outstanding employee stock options because they would have been anti-dilutive. In addition, the computation of diluted earnings per share for the nine-month period ended September 30, 2016 excluded the impact of conversion of net share settled warrants to purchase 1.8 million shares of common shares at an exercise price of $14.93 because the effects would have been anti-dilutive.