S. Earnings Per Share

Basic earnings per share (EPS) amounts are computed by dividing earnings, 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 information used to compute basic and diluted EPS attributable to Alcoa common shareholders was as follows (shares in millions):


	2015			2014		2013
Net (loss) income attributable to Alcoa	$	(322	)	$	268	$	(2,285	)
Less: preferred stock dividends declared		69			21		2
Net (loss) income available to Alcoa common shareholders—basic		(391	)		247		(2,287	)
Add: dividends related to mandatory convertible preferred stock		-			-		-
Add: interest expense related to convertible notes		-			-		-
Net (loss) income available to Alcoa common shareholders—diluted	$	(391	)	$	247	$	(2,287	)
Average shares outstanding—basic		1,259			1,162		1,070
Effect of dilutive securities:
Stock options		-			7		-
Stock and performance awards		-			11		-
Mandatory convertible preferred stock		-			-		-
Convertible notes		-			-		-
Average shares outstanding—diluted		1,259			1,180		1,070

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 since Alcoa generated a net loss. As a result, 77 million share equivalents related to mandatory convertible preferred were not included in the computation of diluted EPS. Additionally, 20 million stock awards, 33 million stock options, and 15 million (weighted-average) share equivalents related to convertible debt (acquired from RTI—see Note F) were not included in the computation of diluted EPS. Had Alcoa generated net income in 2015, 77 million, 15 million, 12 million, and 3 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 2014, 16 million and 22 million share equivalents related to convertible notes and mandatory convertible preferred stock, respectively, were not included in the computation of diluted EPS because their effect was anti-dilutive.

In 2013, basic average shares outstanding and diluted average shares outstanding were the same because the effect of potential shares of common stock was anti-dilutive since Alcoa generated a net loss. As a result, 89 million share equivalents related to convertible notes, 16 million stock awards, and 12 million stock options were not included in the computation of diluted EPS. Had Alcoa generated sufficient income from continuing operations in 2013, 89 million, 9 million, and 2 million potential shares of common stock related to the convertible notes, stock awards, and stock options, respectively, would have been included in diluted average shares outstanding.

Options to purchase 26 million, 3 million, and 12 million shares of common stock at a weighted average exercise price of $12.75, $16.24, and $15.81 per share were outstanding as of December 31, 2015, 2014, and 2013, 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 Alcoa’s common stock.