EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2017

4. EARNINGS PER SHARE

The numerator for both basic and diluted earnings per share (EPS) is either net income, income from continuing operations, or income from discontinued operations. The denominator for basic EPS is the weighted-average number of common shares outstanding during the period. The dilutive effect of outstanding stock options, restricted stock units (RSUs) and performance share units (PSUs) is reflected in the denominator for diluted EPS using the treasury stock method.

The following table is a reconciliation of basic shares to diluted shares.

	Three months ended
	March 31,
(in millions)	2017		2016
Basic shares		541		549
Effect of dilutive securities		10		3
Diluted shares		551		552

The effect of dilutive securities included unexercised stock options, unvested RSUs and contingently issuable shares related to granted PSUs. The computation of diluted EPS excluded 3 million and 20 million equity awards for the three months ended March 31, 2017 and 2016, respectively, because their inclusion would have had an anti-dilutive effect on diluted EPS. Refer to Note 9 for additional information regarding items impacting basic shares.

Stock repurchases

In July 2012, the Board of Directors authorized the repurchase of up to $2 billion of the company’s common stock. The board of directors increased this authority by an additional $1.5 billion in November 2016. During the first quarter of 2017, the company repurchased 1 million shares for $51 million in cash. During the first quarter of 2016, the company did not repurchase any shares. The company has $1.6 billion remaining available under the authorization as of March 31, 2017.