Earnings per Share

9 Months Ended

Sep. 30, 2020

On April 3, 2020, the date of consummation of the Separation, 433,079,455 shares of the Company's common stock, par value $0.01 per share, were distributed to UTC shareholders of record as of March 19, 2020. This share amount is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation as all common stock was owned by UTC prior to the Separation. For the 2019 quarter and year to date calculations, these shares are treated as issued and outstanding at January 1, 2019 for purposes of calculating historical basic and diluted earnings per share.

Prior to the Separation, Otis employees participated in UTC's equity incentive plans, pursuant to which they were granted stock options, stock appreciation rights, restricted stock units, and performance-based restricted stock units. All awards granted under these plans related to UTC common shares. Upon Separation, outstanding awards held by Otis employees under UTC's equity incentive plans were converted in accordance with the EMA using the conversion ratios set forth in the EMA. Depending on whether the awards held on the Separation date were in an unvested or vested status, Otis employees either received converted awards solely in Otis based shares (unvested status) or a combination of Otis, UTC and Carrier Global Corporation ("Carrier") share based awards (vested status). Former Otis employees, and current and former legacy UTC and Carrier employees, who on the Separation date were holding outstanding UTC awards in a vested status also received a combination of

Otis, UTC and Carrier awards post-spin. The conversion methodology used was calculated in accordance with the EMA and with the purpose of maintaining the aggregate intrinsic value of the award immediately after the Separation when compared to the aggregate intrinsic value immediately prior to the Separation. See Note 10, for further detail.

For the purpose of the below diluted earnings per share computation, we only included the units associated with the converted Otis share-based awards. These awards were assumed to be outstanding beginning from April 3, 2020, the Separation date.


	Quarter Ended September 30,				Nine Months Ended September 30,
(dollars in millions, except per share amounts; shares in millions)	2020		2019		2020		2019

Net income attributable to common shareholders	$	266	$	317	$	655	$	898


Basic weighted average number of shares outstanding	433.2		433.1		433.1		433.1
Stock awards and equity units (share equivalent)	1.9		—		1.0		—
Diluted weighted average number of shares outstanding	435.1		433.1		434.1		433.1

Earnings Per Share of Common Stock:
Basic:	$	0.61	$	0.73	$	1.51	$	2.07
Diluted:	$	0.61	$	0.73	$	1.51	$	2.07

The computation of diluted earnings per share excludes the effect of the potential exercise of stock awards, including stock appreciation rights and stock options, when the average market price of the common stock is lower than the exercise price of the related stock awards during the period because the effect would be anti-dilutive. In addition, the computation of diluted earnings per share excludes the effect of the potential exercise of stock awards when the awards' assumed proceeds exceed the average market price of the common shares during the period. There were 5.0 million and 4.8 million of anti-dilutive stock awards excluded from the computation for the quarter and nine months ended September 30, 2020, respectively.