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Earnings Per Share
 6 Months Ended
Jun. 29, 2012
Earnings Per Share [Abstract]  
Earnings Per Share
Earnings Per Share

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:
 
Second Quarters
 
Six Months
 
2012
2011
 
2012
2011
Numerator (Dollars in millions):
 
 
 
 
 
Net Earnings
$
512

$
506

 
$
961

$
901

 
 
 
 
 
 
Denominator (Units in millions):
 
 
 
 
 
Average Common Shares Outstanding
1,041

1,102

 
1,044

1,105

Other Potentially Dilutive Common Shares (a)
2

7

 
2

7

Average Common Shares Outstanding,
Assuming Dilution
1,043

1,109

 
1,046

1,112

 
 
 
 
 
 
Net Earnings Per Share, Basic
$
0.49

$
0.46

 
$
0.92

$
0.81

Net Earnings Per Share, Assuming Dilution
$
0.49

$
0.46

 
$
0.92

$
0.81


(a)
Other potentially dilutive common shares include convertible debt, stock options, common stock equivalents and performance units granted under a long-term management incentive compensation plan.

Basic earnings per share is based on the weighted-average number of shares of common stock outstanding. Earnings per share, assuming dilution, is based on the weighted-average number of shares of common stock outstanding adjusted for the effects of common stock that may be issued as a result of the following types of potentially dilutive instruments:

•
convertible debt;
•
employee stock options; and
•
other equity awards, which include long-term incentive awards.

The Earnings Per Share Topic in the ASC requires CSX to include additional shares in the computation of earnings per share, assuming dilution. The additional shares included in diluted earnings per share represent the number of shares that would be issued if all of the above potentially dilutive instruments were converted into CSX common stock.

When calculating diluted earnings per share, the Earnings Per Share Topic in the ASC requires CSX to include the potential shares that would be outstanding if all outstanding stock options were exercised. This is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. This number is different from outstanding stock options, which is included in Note 3, Share-Based Compensation. All stock options were dilutive for the periods presented; therefore, no stock options were excluded from the diluted earnings per share calculation.

Diluted shares outstanding are not impacted when debentures are converted into CSX common stock because those shares were already included in the diluted shares calculation. Shares outstanding for basic earnings per share, however, are impacted on a weighted-average basis when conversions occur.  During second quarters 2012 and 2011, approximately $1 million and $5 million of face value convertible debentures were converted into 137 thousand and 528 thousand shares of CSX common stock, respectively. As of the end of second quarter 2012, approximately $2 million of convertible debentures at face value remained outstanding, which are convertible into approximately 250 thousand shares of CSX common stock.