Earnings Per Share

6 Months Ended

Jun. 30, 2019

The following table sets forth the computation of basic earnings per share and earnings per share, assuming dilution:



	Second Quarters				Six Months
	2019		2018		2019		2018
Numerator (Dollars in millions):
Net Earnings	$	870	$	877	$	1,704	$	1,572

Denominator (Units in millions):
Average Common Shares Outstanding	805		864		810		875
Other Potentially Dilutive Common Shares	2		4		2		3
Average Common Shares Outstanding, Assuming Dilution	807		868		812		878

Net Earnings Per Share, Basic	$	1.08	$	1.02	$	2.10	$	1.80
Net Earnings Per Share, Assuming Dilution	$	1.08	$	1.01	$	2.10	$	1.79

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 and common stock equivalents adjusted for the effects of common stock that may be issued as a result of potentially dilutive instruments. CSX's potentially dilutive instruments are made up of equity awards, including performance units and employee stock options.

When calculating diluted earnings per share, the potential shares that would be outstanding if all outstanding stock options were exercised are included. This number is different from outstanding stock options because it is offset by shares CSX could repurchase using the proceeds from these hypothetical exercises to obtain the common stock equivalent. Approximately 900 thousand and 1 million of total average outstanding stock options for the quarters ended June 30, 2019 and June 30, 2018, respectively, and 800 thousand and 900 thousand for the six months ended June 30, 2019 and June 30, 2018, respectively, were excluded from the diluted earnings per share calculation because their effect was antidilutive.

Share Repurchases

In February 2018, the Company announced an increase to the $1.5 billion share repurchase program first announced in October 2017, bringing the total authorized to $5 billion. This program was completed on January 16, 2019. Also on January 16, 2019, the Company announced a new $5 billion share repurchase program. During second quarter and six months ended 2019 and 2018, the Company engaged in the following repurchase activities:



	Second Quarters				Six Months
	2019		2018		2019		2018
Shares Repurchased (Millions)	11		16		23		31
Cost of Shares (Dollars in millions)	$	860	$	974	$	1,656	$	1,810

NOTE 2. Earnings Per Share, continued

On April 20, 2018, the Company entered into an accelerated share repurchase agreement to repurchase shares of the Company’s common stock. Under this agreement, the Company made a prepayment of $450 million to a financial institution and received an initial delivery of shares valued at $360 million, or 6 million shares. The remaining balance of $90 million was settled through receipt of additional shares in July 2018, with the final net number of shares calculated based on the volume-weighted average price of the Company's common stock over the term of the agreement, less a discount. Approximately 7 million total shares were repurchased under this agreement. Under a separate accelerated share repurchase agreement in January 2018, the Company paid $150 million to a financial institution and received approximately 3 million total shares in first quarter 2018.

Share repurchases may be made through a variety of methods including, but not limited to, open market purchases, purchases pursuant to Rule 10b5-1 plans, accelerated share repurchases and negotiated block purchases. The timing of share repurchases depends upon management's assessment of marketplace conditions and other factors, and the program remains subject to the discretion of the Board of Directors. Future share repurchases are expected to be funded by cash on hand, cash generated from operations and debt issuances. Shares are retired immediately upon repurchase. In accordance with the Equity Topic in the ASC, the excess of repurchase price over par value is recorded in retained earnings.