Computation of Earnings (Loss) Per Basic/Diluted Common Share

6 Months Ended

Jun. 30, 2014

Computation of Earnings (Loss) Per Basic/Diluted Common Share

Computation of Earnings (Loss) Per Basic/Diluted Common Share

12.       Computation of Basic/Diluted Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share (amounts in millions, except per share data):

				Three Months Ended June 30,				Six Months Ended June 30,
				2014		2013		2014		2013
Numerator:
	Consolidated net income			$	204	$	324	$	497	$	780
		Less: Distributed earnings to unvested stock-based awards
			that participate in earnings		---		---		(5)		(4)
		Less: Undistributed earnings allocated to unvested stock-based
			awards that participate in earnings		(4)		(6)		(8)		(12)
	Numerator for basic and diluted earnings per common share -
		income available to common shareholders			200		318		484		764
Denominator:
	Denominator for basic earnings per common share - weighted-
		average common shares outstanding			716		1,118		712		1,116
	Effect of potential dilutive common shares under the treasury
		stock method: Employee stock options and others			9		9		11		8
		Denominator for diluted earnings per common share -
			weighted-average common shares outstanding plus
			dilutive effect of employee stock options and others		725		1,127		723		1,124
Basic earnings per common share				$	0.28	$	0.28	$	0.68	$	0.68
Diluted earnings per common share				$	0.28	$	0.28	$	0.67	$	0.68

Certain of our unvested restricted stock rights (including restricted stock units, restricted stock awards, andperformance shares) met the definition of participating securities based on their rights to dividends or dividend equivalents. Therefore, we are required to use the two-class method in our computation of basic and diluted earnings per common share. For the three and six months ended June 30, 2014, on a weighted-average basis, we had outstanding unvested restricted stock rights with respect to 16million shares of common stockthat are participating in earnings. For the three and six months ended June 30, 2013, on a weighted-average basis, respectively, we had outstanding unvested restricted stock rights with respect to 24 million and 25 million shares of common stockthat are participating in earnings.

Potential common shares are not included in the denominator of the diluted earnings per common share calculation when the inclusion of such shares would be anti-dilutive. Therefore, options to acquire 2 millionand 3 million shares of common stock were not included in the calculation of diluted earnings per common share for the three and six months ended June 30, 2014, respectively, and options to acquire 8 million and 9 million shares of common stock were not included in the calculation of diluted earnings per common share for the three and six months ended June 30, 2013, respectively, as the effect of their inclusion would be anti-dilutive.

Certain of our employee-related restricted stock rights are contingently issuable upon the satisfaction of pre-defined performance measures. These shares are included in the weighted-average dilutive common shares only if the performance measures are met as of the end of the reporting period. Approximately 3 million shares are not included in the computation of diluted earnings per share for the three and six months ended June 30, 2014, as their respective performance measures have not been met.

See Note 1 of the Notes to Condensed Consolidated Financial Statements for details of the Purchase Transaction which reduced outstanding sharesas compared to prior year.