Earnings Per Share

3 Months Ended

Mar. 31, 2019

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



	Three Months Ended
	March 31,
	2019		2018
Net income (in millions)	$	79	$	79
Shares (in thousands):
Weighted average common shares outstanding	179,720		179,858
Add: Participating securities (a)	26		23
Weighted average common shares outstanding — Basic	179,746		179,881
Plus incremental shares from assumed conversions: (b)
Dilutive effect of stock options	835		928
Dilutive effect of restricted stock units and performance share units	532		556
Weighted average common shares outstanding — Diluted	181,113		181,365
Basic earnings per share	$	0.44	$	0.44
Diluted earnings per share	$	0.43	$	0.43


(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 16, "Share-Based Compensation Plans" to the condensed consolidated financial statements for further detail on the performance share units.



	Three Months Ended
	March 31,
(in thousands)	2019	2018
Stock options	1,394	1,218
Restricted stock units	348	294
Performance share units	472	538