Earnings Per Share

6 Months Ended

Jun. 30, 2020

NOTE Q. EARNINGS PER SHARE

The Company presents both basic and diluted earnings per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted EPS is calculated by dividing net income by the weighted average number of common shares and common equivalent shares outstanding during the reporting period that are calculated using the treasury stock method for stock-based awards. The treasury stock method assumes that the Company uses the proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future and compensation cost for future service that the Company has not yet recognized. For each of the three and six months ended June 30, 2020, there were 1 million outstanding stock options excluded from the diluted EPS calculation because they were anti-dilutive. For each of the three and six months ended June 30, 2019, there were no outstanding stock options excluded from the diluted EPS calculation because they were anti-dilutive.

The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net income	$	23	$	181	$	162	$	348
Weighted average shares of common stock outstanding		113		123		114		124
Dilutive effect of stock-based awards		1		1		1		1
Diluted weighted average shares of common stock outstanding		114		124		115		125
Basic earnings per share attributable to common stockholders	$	0.20	$	1.47	$	1.42	$	2.81
Diluted earnings per share attributable to common stockholders	$	0.20	$	1.46	$	1.41	$	2.78