Net Earnings Per Share

9 Months Ended

Sep. 25, 2020

Earnings Per Share [Abstract]

Net Earnings Per Share

NOTE 11. NET EARNINGS PER SHARE

Basic net earnings per share (“EPS”) is calculated by dividing net earnings attributable to common stockholders by the weighted average number of shares of common stock outstanding for the applicable period. Diluted EPS is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans under the treasury stock method, except where the inclusion of such shares would have an anti-dilutive impact. There were 5.3 million anti-dilutive options excluded from the diluted EPS calculation for the three month period ended September 25, 2020 and 3.3 million of anti-dilutive options excluded from the diluted EPS calculation for the three month period ended September 27, 2019. There were 5.5 million and 1.7 million anti-dilutive options excluded for the nine month periods ended September 25, 2020 and September 27, 2019, respectively.

As described in Note 5, upon conversion of the Convertible Notes, holders will receive cash, shares of our common stock, or a combination thereof, at our election. Our intention is to settle such conversions through cash up to the principal amount of the Convertible Notes and, if applicable, through shares of our common stock for conversion value, if any, in excess of the principal amount of the Convertible Notes. We believe we have the ability to settle these obligations as intended, and therefore we have accounted for the conversion features under the treasury stock method in our calculation of EPS. Because the fair value of our common stock is below the conversion price, the Convertible Notes had no impact on our earnings per share for both the three and nine month periods ended September 25, 2020 and September 27, 2019.

The impact of our Mandatory Convertible Preferred Stock (“MCPS”) calculated under the if-converted method was anti-dilutive for both the three and nine month periods ended September 25, 2020, and 18.4 million shares were excluded from the diluted EPS calculation for each respective period. The impact of our MCPS calculated under the if-converted method was anti-dilutive for both the three and nine month periods ended September 27, 2019, and 18.4 million shares were excluded from the diluted EPS calculation for each respective period.

Information related to the calculation of net earnings per share of common stock is summarized as follows ($ and shares in millions, except per share amounts):

	Three Months Ended				Nine Months Ended
	September 25, 2020		September 27, 2019		September 25, 2020		September 27, 2019
Numerator
Net earnings from continuing operations	$	225.8	$	207.3	$	398.4	$	546.6
Mandatory convertible preferred stock cumulative dividends	(17.3)		(17.3)		(51.8)		(51.8)
Net earnings attributable to common stockholders from continuing operations	$	208.5	$	190.0	$	346.6	$	494.8
Denominator
Weighted average common shares outstanding used in basic earnings per share	337.6		336.1		337.3		335.6
Incremental common shares from:
Assumed exercise of dilutive options and vesting of dilutive Stock Awards	3.2		3.8		2.9		4.1
Weighted average common shares outstanding used in diluted earnings per share	340.8		339.9		340.2		339.7
Net earnings from continuing operations per common share - Basic	$	0.62	$	0.57	$	1.03	$	1.47
Net earnings from continuing operations per common share - Diluted	$	0.61	$	0.56	$	1.02	$	1.46

We declared and paid cash dividends per common share for both the three and nine month periods ended September 25, 2020 as presented below. We declared and paid the MCPS dividends in the first and second quarter of 2019, and declared and accrued the MCPS dividends in the third quarter of 2019. The MCPS dividends for the first, second, and third quarter of 2020 were declared, accrued, and paid as follows:

	Dividend Per Common Share		Amount ($ in millions)		Dividend per MCPS		Amount ($ in millions)
2020:
First quarter	$	0.07	$	23.5	$	12.5	$	17.3
Second quarter	0.07		23.6		12.5		17.2
Third quarter	0.07		23.6		12.5		17.3
Total	$	0.21	$	70.7	$	37.5	$	51.8
2019:
First quarter	$	0.07	$	23.4	$	12.5	$	17.3
Second quarter	0.07		23.4		12.5		17.2
Third quarter	0.07		23.5		12.5		17.3
Total	$	0.21	$	70.3	$	37.5	$	51.8

The first quarter 2020 MCPS dividends were paid on April 1, 2020, the second quarter 2020 MCPS dividends were paid on July 1, 2020, and the third quarter 2020 MCPS dividends were paid on October 1, 2020.

Vontier Separation - Subsequent Event

In connection with the Vontier Separation, we triggered the anti-dilution adjustment pursuant to the terms of the MCPS. Each outstanding share of MCPS will convert automatically on July 1, 2021 into shares of common stock based on a conversion ratio as revised pursuant to such anti-dilution adjustments.