EARNINGS PER SHARE

Basic and diluted earnings per share are based on the weighted average number of shares of common stock and potential common stock outstanding during the period. Potential common stock, for purposes of determining diluted earnings per share, includes the effects of dilutive RSUs, stock options and convertible securities. The effect of such potential common stock is computed using the treasury stock method or the if-converted method, as applicable.

The following table is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computation for income from continuing operations for the three and nine months ended September 30, 2017 and 2016, where income or loss represents the numerator and weighted average shares represent the denominator.



Three Months Ended September 30,	2017						2016
(in millions, except per share data)	Income		Shares	$ per Share			Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax ⁽¹⁾	$	152	660	$	0.23		$	171	659	$	0.26
EFFECT OF DILUTIVE SECURITIES
Restricted stock units	—		3	—			—		3	—
DILUTED EARNINGS PER SHARE	$	152	663	$	0.23		$	171	662	$	0.26

Nine Months Ended September 30,	2017						2016
(in millions, except per share data)	Income		Shares	$ per Share			Income		Shares	$ per Share

BASIC EARNINGS PER SHARE
Income from continuing operations attributable to The AES Corporation common stockholders, net of tax ⁽²⁾	$	181	660	$	0.28		$	203	660	$	0.31
EFFECT OF DILUTIVE SECURITIES
Restricted stock units	—		2	(0.01		)	—		2	—
DILUTED EARNINGS PER SHARE	$	181	662	$	0.27		$	203	662	$	0.31

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⁽¹⁾	Income from continuing operations, net of tax, of $176 million less the $5 million adjustment to retained earnings to record the DP&L redeemable preferred stock at its redemption value as of September 30, 2016.


⁽²⁾	Income from continuing operations, net of tax, of $208 million less the $5 million adjustment to retained earnings to record the DP&L redeemable preferred stock at its redemption value as of September 30, 2016.

For the three and nine months ended September 30, 2017 and 2016, respectively, the calculation of diluted earnings per share excluded 6 million and 7 million outstanding stock awards that could potentially dilute basic earnings per share in the future. All 15 million shares of potential common stock associated with convertible debentures (“TECONs”) were omitted from the earnings per share calculation for the three and nine months ended September 30, 2016. The company redeemed all of its existing TECONs in June 2017. The stock awards and convertible debentures were excluded from the calculation because they were anti-dilutive.