Earnings Per Share

9 Months Ended

Sep. 30, 2016

The following is a reconciliation of the shares used in calculating basic and diluted net earnings per share.



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Net income (in millions)	$	73	$	88	$	210	$	226
Shares (in thousands):
Weighted average common shares outstanding	179,272		180,815		178,951		181,428
Add: Participating securities (a)	36		30		37		43
Weighted average common shares outstanding — Basic	179,308		180,845		178,988		181,471
Plus incremental shares from assumed conversions: (b)
Dilutive effect of stock options	593		424		462		489
Dilutive effect of restricted stock units and performance share units	409		363		388		376
Weighted average common shares outstanding — Diluted	180,310		181,632		179,838		182,336
Basic earnings per share	$	0.41	$	0.48	$	1.17	$	1.25
Diluted earnings per share	$	0.41	$	0.48	$	1.17	$	1.24


(a)	Restricted stock unit awards containing rights to non-forfeitable dividends that participate in undistributed earnings with common shareholders are considered participating securities for purposes of computing earnings per share.

(b)

Incremental shares from stock options, restricted stock units and performance share units are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock units and performance share units, reduced by the repurchase of shares with the proceeds from the assumed exercises and unrecognized compensation expense for outstanding awards. Performance share units will be included in the treasury stock calculation of diluted earnings per share upon achievement of underlying performance or market conditions at the end of the reporting period. See Note 14, "Share-Based Compensation Plans" to the condensed consolidated financial statements for further detail on the performance share units.



	Three Months Ended		Nine Months Ended
	September 30,		September 30,
(in thousands)	2016	2015	2016	2015
Stock options	1,701	2,703	2,008	2,712
Restricted stock units	529	747	570	754
Performance share units	414	191	360	187