Stock-Based Compensation and Earnings Per Share (Tables)

3 Months Ended

Dec. 31, 2017

Stock Based Compensation and Earnings Per Share Abstract

Allocation of Stock-Based Compensation Expense

Stock-based compensation expense, which is calculated net of an assumed forfeiture rate, and related income tax benefit included within the Condensed Consolidated Statement of Operations is as follows:

	Three Months Ended
	December 31
(in millions)	2017		2016
Stock-based compensation expense included in:
Product cost of sales	$	3	$	2
Selling, general and administrative expenses	6		4
Total	$	9	$	6
Income tax benefit	$	2	$	2

Awards of Equity Instruments

The Company issued awards of equity instruments under the Company's various incentive plans for the three months ended December 31, 2017 and 2016, as follows:

	Options			Performance Shares			Restricted Stock Units
(shares in thousands)	Number Issued	Weighted Average Fair Value		Number Issued	Weighted Average Fair Value		Number Issued	Weighted Average Fair Value
Three months ended December 31, 2017	—	$	—	140.8	$	138.68	252.4	$	133.36
Three months ended December 31, 2016	646.6	$	17.18	125.0	$	87.95	2.8	$	85.37

Assumptions Used to Value Option Grants

The fair value of each option granted was estimated using a binomial lattice pricing model and the following weighted average assumptions:

	2017 Grants
Risk-free interest rate	1.0% - 2.7%
Expected dividend yield	1.3% - 1.5%
Expected volatility	19.0	%
Expected life	7 years

Computation of Basic and Diluted Earnings Per Share

The computation of basic and diluted earnings per share is as follows:

	Three Months Ended
	December 31
(in millions, except per share amounts)	2017		2016
Numerator for basic and diluted earnings per share:
Net income	$	280	$	145
Denominator:
Denominator for basic earnings per share – weighted average common shares	163.4		130.4
Effect of dilutive securities:
Stock options	1.3		1.0
Performance shares, restricted stock and restricted stock units	0.7		0.5
Dilutive potential common shares	2.0		1.5
Denominator for diluted earnings per share – adjusted weighted average shares and assumed conversion	165.4		131.9
Earnings per share:
Basic	$	1.71	$	1.11
Diluted	$	1.69	$	1.10