Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings (loss), after the deduction of preferred stock dividends declared, by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The number of shares and per share amounts for all periods presented below have been updated to reflect the Reverse Stock Split (see Note O). The information used to compute basic and diluted EPS attributable to Arconic common shareholders was as follows (shares in millions):



	2017			2016			2015
Net loss from continuing operations attributable to Arconic	$	(74	)	$	(1,062	)	$	(156	)
Net income from continuing operations attributable to noncontrolling interests	—			—			(1		)
Less: preferred stock dividends declared	(53		)	(69		)	(69		)
Loss from continuing operations available to Arconic common shareholders	(127		)	(1,131		)	(226		)
Income (loss) from discontinued operations after income taxes and noncontrolling interests⁽¹⁾	—			121			(165		)
Net loss available to Arconic common shareholders—basic	(127		)	(1,010		)	(391		)
Add: interest expense related to convertible notes	—			—			—
Add: dividends related to mandatory convertible preferred stock	—			—			—
Net loss available to Arconic common shareholders—diluted	$	(127	)	$	(1,010	)	$	(391	)
Average shares outstanding—basic	451			438			420
Effect of dilutive securities:
Stock options	—			—			—
Stock and performance awards	—			—			—
Mandatory convertible preferred stock	—			—			—
Convertible notes	—			—			—
Average shares outstanding—diluted	451			438			420


⁽¹⁾	Calculated from the Statement of Consolidated Operations as Income (loss) from discontinued operations after income taxes less Net income from discontinued operations attributable to noncontrolling interests.

In 2017, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive as Arconic generated a net loss. As a result, 39 million share equivalents related to the mandatory convertible preferred stock, 14 million (weighted average) share equivalents related to convertible notes (acquired from RTI - see Note O), 11 million stock options, and 7 million stock awards were not included in the computation of diluted EPS. Had Arconic generated sufficient net income in 2017, 30 million, 14 million, 5 million, and 1 million potential shares of common stock related to the mandatory convertible preferred stock, convertible notes, stock awards, and stock options, respectively, would have been included in diluted average shares outstanding. The mandatory convertible preferred stock converted on October 2, 2017 (see Note O).

In 2016, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive as Arconic generated a net loss. As a result, 39 million share equivalents related to the mandatory convertible preferred stock, 14 million share equivalents related to convertible notes, 13 million stock options, and 8 million stock awards were not included in the computation of diluted EPS. Had Arconic generated sufficient net income in 2016, 28 million, 10 million, 4 million, and 1 million potential shares of common stock related to the mandatory convertible preferred stock, convertible notes, stock awards, and stock options, respectively, would have been included in diluted average shares outstanding.

In 2015, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive as Arconic generated a net loss. As a result, 26 million share equivalents related to mandatory convertible preferred stock, 7 million stock awards, 11 million stock options, and 5 million share equivalents related to convertible notes were not included in the computation of diluted EPS. Had Arconic generated sufficient net income in 2015, 26 million, 5 million, 4 million, and 1 million potential shares of common stock related to the mandatory convertible preferred stock, convertible notes, stock awards, and stock options, respectively, would have been included in diluted average shares outstanding.

Options to purchase 3 million, 10 million, and 9 million shares of common stock at a weighted average exercise price of $33.32, $26.93, and $38.25 per share were outstanding as of December 31, 2017, 2016, and 2015, respectively, but were not included in the computation of diluted EPS because they were anti-dilutive, as the exercise prices of the options were greater than the average market price of Arconic’s common stock.