EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2020


8.			EARNINGS PER SHARE

Basic (loss) earnings per common share attributable to common shareholders is calculated by dividing net (loss) income attributable to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per common share attributable to common shareholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period, except in periods when there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings per common share applicable to common shareholders by application of the treasury stock method using average market prices during the period.

Our calculation of diluted earnings per share attributable to common shareholders reflects our intent to settle conversions of the Convertible Notes through a combination settlement, which contemplates repayment in cash of the principal amount and repayment in shares of our common stock of any excess of the conversion value over the principal amount (the “conversion premium”). Therefore, we include only the shares that may be issued with respect to any conversion premium in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method. As no conversion premium existed as of September 30, 2020 or September 30, 2019, there was no dilutive impact from the Convertible Notes for either the third quarter or first three quarters of 2020 or 2019.

The shares issuable on exercise of the Warrants (as defined in Footnote 13 “Debt”) sold in connection with the issuance of the Convertible Notes will not impact the total dilutive weighted average shares outstanding unless and until the price of our common stock exceeds the strike price. If and when the price of our common stock exceeds the strike price of the Warrants, we will include the dilutive effect of the additional shares that may be issued upon exercise of the Warrants in total dilutive weighted average shares outstanding, which we calculate using the treasury stock method. The Convertible Note Hedges (as defined in Footnote 13 “Debt”) purchased in connection with the issuance of the Convertible Notes are considered to be anti-dilutive and do not impact our calculation of diluted earnings per share attributable to common shareholders for any periods presented herein.

The table below illustrates the reconciliation of the earnings and number of shares used in our calculation of basic and diluted (loss) earnings per share attributable to common shareholders.


	Three Months Ended				Nine Months Ended
(in millions, except per share amounts)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019(1)
Computation of Basic (Loss) Earnings Per Share Attributable to Common Shareholders
Net (loss) income attributable to common shareholders	$	(62)	$	(9)	$	(238)	$	64
Shares for basic (loss) earnings per share	41.2		43.4		41.3		44.5
Basic (loss) earnings per share	$	(1.51)	$	(0.21)	$	(5.76)	$	1.44
Computation of Diluted (Loss) Earnings Per Share Attributable to Common Shareholders
Net (loss) income attributable to common shareholders	$	(62)	$	(9)	$	(238)	$	64
Shares for basic (loss) earnings per share	41.2		43.4		41.3		44.5
Effect of dilutive shares outstanding
Employee stock options and SARs	—		—		—		0.3
Restricted stock units	—		—		—		0.3
Shares for diluted (loss) earnings per share	41.2		43.4		41.3		45.1
Diluted (loss) earnings per share	$	(1.51)	$	(0.21)	$	(5.76)	$	1.43

_______________________________

(1)The computations of diluted earnings per share attributable to common shareholders exclude approximately 401,000 shares of common stock, the maximum number of shares issuable as of September 30, 2019, upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.

In accordance with the applicable accounting guidance for calculating earnings per share, for the first three quarters of 2019, we excluded from our calculation of diluted earnings per share 249,737 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $97.53 to $143.38, were greater than the average market price for the applicable period.