EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2023

Basic earnings or loss per common share attributable to common shareholders is calculated by dividing net income or loss 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 or loss 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 or loss per common share applicable to common shareholders by application of the treasury stock method using average market prices during the period.

The shares issuable upon exercise of the warrants sold in connection with the issuance of our convertible notes will not impact the total dilutive weighted average shares outstanding unless and until the price of our common stock exceeds the respective strike price. If and when the price of our common stock exceeds the respective strike price of any 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 purchased in connection with each issuance of our 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 or loss and number of shares used in our calculation of basic earnings or loss per share attributable to common shareholders.


	Three Months Ended				Nine Months Ended
(in millions, except per share amounts)	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Net income attributable to common shareholders	$	42	$	109	$	219	$	303
Shares for basic earnings per share	36.4		39.5		36.9		41.1
Basic earnings per share	$	1.16	$	2.76	$	5.96	$	7.39

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


	Three Months Ended				Nine Months Ended
(in millions, except per share amounts)	September 30, 2023(1)		September 30, 2022(1)		September 30, 2023(1)		September 30, 2022(1)





Net income attributable to common shareholders	$	42	$	109	$	219	$	303
Add back of interest expense related to convertible notes, net of tax	5		1		14		4
Numerator used to calculate diluted earnings per share	$	47	$	110	$	233	$	307

Shares for basic earnings per share	36.4		39.5		36.9		41.1
Effect of dilutive shares outstanding
Employee SARs	0.1		0.2		0.1		0.2
Restricted stock units	0.3		0.3		0.3		0.3
2022 Convertible Notes ($230 million of principal)	—		—		—		0.9
2026 Convertible Notes ($575 million of principal)	3.5		3.4		3.5		3.4
2027 Convertible Notes ($575 million of principal)	3.0		—		3.0		—
Shares for diluted earnings per share	43.3		43.4		43.8		45.9
Diluted earnings per share	$	1.09	$	2.53	$	5.33	$	6.68

(1)The computations of diluted earnings per share attributable to common shareholders exclude approximately 200,000 and 293,000 shares of common stock, the maximum number of shares issuable as of September 30, 2023 and September 30, 2022, respectively, 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 third quarter and first three quarters of 2023, we excluded from our calculation of diluted earnings per share 287,125 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $143.38 to $173.88, were greater than the average market price of our common stock for the applicable period.

For the third quarter of 2022, we excluded from our calculation of diluted earnings per share 252,314 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $143.38 to $173.88, were greater than the average market price of our common stock for the applicable period.

For the first three quarters of 2022, we excluded from our calculation of diluted earnings per share 199,813 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $159.27 to $173.88, were greater than the average market price of our common stock for the applicable period.