(11) EQUITY AND EARNINGS PER SHARE

Basic and Diluted Earnings Per Share

PHI’s basic and diluted earnings per share (EPS) calculations are shown below:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014			2013
	*(millions of dollars, except per share data)*
Income (Numerator):
Net income from continuing operations	$	79	$	110	$	207		$	52
Net income (loss) from discontinued operations		—		8		—			(322	)

Net income (loss)	$	79	$	118	$	207		$	(270	)

Shares (Denominator) (in millions):
Weighted average shares outstanding for basic computation:
Average shares outstanding		252		249		251			245
Adjustment to shares outstanding		—		—		—			—

Weighted Average Shares Outstanding for Computation of Basic Earnings Per Share of Common Stock		252		249		251			245
Net effect of potentially dilutive shares (a)		—		—		1	(b)		—

Weighted Average Shares Outstanding for Computation of Diluted Earnings Per Share of Common Stock		252		249		252			245

Basic and Diluted Earnings per Share
Earnings per share of common stock from continuing operations	$	0.31	$	0.44	$	0.82		$	0.21
Earnings (loss) per share of common stock from discontinued operations		—		0.04		—			(1.31	)

Basic and diluted earnings (loss) per share	$	0.31	$	0.48	$	0.82		$	(1.10	)

(a)	There were no options to purchase shares of common stock that were excluded from the calculation of diluted EPS for each of the three and nine months ended September 30, 2014 and 2013.

(b)	Includes certain unvested performance-based restricted stock units.

Equity Forward Transaction

During 2012, PHI entered into an equity forward transaction in connection with a public offering of PHI common stock. Pursuant to the terms of this transaction, a forward counterparty borrowed 17,922,077 shares of PHI’s common stock from third parties and sold them to a group of underwriters for $19.25 per share, less an underwriting discount equal to $0.67375 per share. Under the terms of the equity forward transaction, upon physical settlement thereof, PHI was required to issue and deliver shares of PHI common stock to the forward counterparty at the then applicable forward sale price. The forward sale price was initially determined to be $18.57625 per share at the time the equity forward transaction was entered into and was subject to reduction from time to time in accordance with the terms of the equity forward transaction. PHI believed that the equity forward transaction substantially eliminated future equity price risk because the forward sale price was determinable as of the date that PHI entered into the equity forward transaction and was only reduced pursuant to the contractual terms of the equity forward transaction through the settlement date, which reductions were not affected by a future change in the market price of the PHI common stock. On February 27, 2013, PHI physically settled the equity forward at the then applicable forward sale price of $17.39 per share. The proceeds of approximately $312 million were used to repay outstanding commercial paper, a portion of which had been issued in order to make capital contributions to the utilities, and for general corporate purposes.