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 restricted stock units, 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 tables present 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, 2011 and 2010. In the table below, income represents the numerator and weighted-average shares represent the denominator:

			Three Months Ended September 30,
			2011					2010
			Loss		Shares	$ per Share		Income		Shares	$ per Share

			(in millions except per share data)
BASIC EARNINGS PER SHARE
	Income from continuing operations attributable
		to The AES Corporation common stockholders	$	(119)	778	$	(0.15)	$	41	794	$	0.05
EFFECT OF DILUTIVE SECURITIES
	Stock options			-	-		-		-	2		-
	Restricted stock units			-	-		-		-	3		-
DILUTED EARNINGS PER SHARE			$	(119)	778	$	(0.15)	$	41	799	$	0.05

			Nine Months Ended September 30,
			2011					2010
			Income		Shares	$ per Share		Income		Shares	$ per Share

			(in millions except per share data)
BASIC EARNINGS PER SHARE
	Income from continuing operations attributable
		to The AES Corporation common stockholders	$	296	783	$	0.38	$	354	762	$	0.46
EFFECT OF DILUTIVE SECURITIES
	Stock options			-	1		-		-	2		-
	Restricted stock units			-	3		-		-	3		-
DILUTED EARNINGS PER SHARE			$	296	787	$	0.38	$	354	767	$	0.46

There were approximately 15,564,118 and 16,951,804 additional options outstanding at September 30, 2011 and 2010, respectively, that could potentially dilute basic earnings per share in the future. Those options were not included in the computation of diluted earnings per share because the exercise price exceeded the average market price during the related periods. For the three months ended September 30, 2011 and 2010, all convertible debentures were omitted from the earnings per share calculation because they were anti-dilutive. During the three months ended September 30, 2011, 115,597 shares of common stock were issued upon the exercise of stock options. For the nine months ended September 30, 2011 and 2010, all convertible debentures were omitted from the earnings per share calculation because they were anti-dilutive. During the nine months ended September 30, 2011, 1,073,539 shares of common stock were issued under the Company's profit sharing plan and 589,948 shares of common stock were issued upon the exercise of stock options.