Earnings Per Share

9 Months Ended

Sep. 30, 2016

Note 11: Earnings Per Share

Earnings per share is calculated using the two-class method in which earnings are allocated to common stock and participating securities based on their rights to receive nonforfeitable dividends or dividend equivalents. The Company grants restricted stock and restricted stock units to certain employees and non-employee directors in accordance with the Company’s long-term incentive programs, which entitle the participants to receive nonforfeitable dividends or dividend equivalents during the vesting period on the same basis as those dividends are paid to common shareholders. These unvested stock awards represent participating securities. During periods of net income, the calculation of earnings per share exclude the income attributable to participating securities in the numerator and the dilutive impact of these securities from the denominator. During periods of net loss, no effect is given to participating securities in the numerator and the denominator excludes the dilutive impact of these securities since they do not share in the losses of the Company.

Basic earnings per share excludes dilution and is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the dilutive effect of all stock options, warrants and unvested restricted stock outstanding during the period that could potentially result in the issuance of common stock. The dilution from stock options, warrants and unvested restricted stock are calculated by applying the two-class method and using the treasury stock method. The treasury stock method assumes the proceeds from the exercise of stock options and warrants or the unrecognized compensation expense from unvested restricted stock will be used to purchase shares of the Company’s common stock at the average market price during the period. During periods of net loss, stock options, warrants and unvested restricted stock are excluded from the calculation because they would have an antidilutive effect. Therefore, in periods of net loss, the calculation of basic and diluted earnings per share would result in the same value. For the three months ended September 30, 2016 and 2015, there were 16,109,462 and 18,807,517, respectively, of stock options, warrants and unvested restricted stock outstanding that were antidilutive. For the nine months ended September 30, 2016 and 2015, there were 17,323,421 and 17,975,504, respectively, of stock options, warrants and unvested restricted stock outstanding that were antidilutive.

The following table presents the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2016 and 2015:

		Three Months Ended September 30,				Nine Months Ended September 30,
In millions except share and per share amounts		2016		2015		2016			2015
Basic earnings per share:
Net income (loss)		$	31	$	(35)	$	(73)	$	98
Less: undistributed earnings allocated to participating securities			1		-		-		3
Net income (loss) available to common shareholders			30		(35)		(73)		95

Basic weighted average shares⁽¹⁾			131,633,411		155,239,723		133,368,752		169,610,370

Net income (loss) per basic common share:		$	0.23	$	(0.23)	$	(0.55)	$	0.56

Diluted earnings per share:
Net income (loss)		$	31	$	(35)	$	(73)	$	98
Less: undistributed earnings allocated to participating securities			1		-		-		3
Net income (loss) available to common shareholders			30		(35)		(73)		95

Basic weighted average shares⁽¹⁾			131,633,411		155,239,723		133,368,752		169,610,370
Effect of common stock equivalents:
	Stock options		408,656		-		-		956,016
Diluted weighted average shares			132,042,067		155,239,723		133,368,752		170,566,386

Net income (loss) per diluted common share:		$	0.23	$	(0.23)	$	(0.55)	$	0.55
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(1) - Includes 955,217 and 600,826 of participating securities that met the service condition and were eligible to receive nonforfeitable dividends or dividend equivalents for the three months ended September 30, 2016 and 2015, respectively. Includes 867,160 and 619,889 of participating securities that met the service condition and were eligible to receive nonforfeitable dividends or dividend equivalents for the nine months ended September 30, 2016 and 2015, respectively.