F. Earnings Per Share – Basic earnings per share (EPS) amounts are computed by dividing earnings by the average number of common shares outstanding. Diluted EPS amounts assume the issuance of common stock for all potentially dilutive share equivalents outstanding.

The information used to compute basic and diluted EPS attributable to Alcoa Corporation common shareholders was as follows (shares in millions):


	Third quarter ended September 30,					Nine months ended September 30,
	2017		2016			2017		2016
Net income (loss) attributable to Alcoa Corporation	$	113	$	(10	)	$	413	$	(275	)

Average shares outstanding – basic		185		182			184		182
Effect of dilutive securities:
Stock options		1		—			1		—
Stock and performance awards		1		—			2		—

Average shares outstanding – diluted		187		182			187		182

In the 2016 third quarter and nine-month period, the EPS included on the accompanying Statement of Consolidated Operations was calculated based on the 182,471,195 shares of Alcoa Corporation common stock distributed on the Separation Date in conjunction with the completion of the Separation Transaction and is considered pro forma in nature. Prior to November 1, 2016, Alcoa Corporation did not have any issued and outstanding publicly-traded common stock.

As of September 30, 2017, there were 5 million outstanding employee stock options and stock awards (including performance), which resulted in 2 million and 3 million of dilutive securities in the 2017 third quarter and nine-month period, respectively. The following describes, in general, how the dilutive securities are calculated. The calculation of dilutive securities requires a company to assume that it will purchase shares of its own common stock from the stock market to offset the dilution that eventual vested employee stock compensation can create. This assumption is based on a predetermined formula and does not consider whether a company engages in a regular practice of purchasing its own common stock. The number of shares a company is presumed to have purchased of its own common stock is calculated based on the average market price of a company’s common stock during the respective period. The calculated number of shares presumed purchased by a company is then subtracted from the total number of shares issuable to the employees to derive the number of dilutive securities. As a result, each stock option or stock award that impacts the number of dilutive securities in a given period is included on a less than full share basis.